MYNORTHWEST NEWS

Gov. Inslee signs Washington’s new capital gains tax

May 4, 2021, 2:11 PM | Updated: 3:05 pm

olympia, capital gains...

A self-identified member of the Patriot movement flies an upside down American Flag on Feb. 6, 2021 in Olympia, Washington. (Photo by Nathan Howard/Getty Images)

(Photo by Nathan Howard/Getty Images)

Gov. Inslee signed off on Washington’s new capital gains tax Tuesday afternoon.

State Representative Noel Frame calls the tax “another gigantic step towards rebalancing the tax code.”

Frame and most other Democrats are celebrating the legislature’s passage of the 7% tax on capital gains over $250,000, which will bring in an estimated $415 million in 2023, its first year. That will be used to invest in child care, early learning, and more as a way to balance the state’s tax code.

State lawmakers OK controversial capital gains tax, court battle expected

However, the conservative Freedom Foundation has already filed a lawsuit. The group’s Maxford Nelsen says in addition to the tax being unconstitutional because it only targets certain income, he also says it is an illegal income tax.

“The legislature can call it whatever it likes, but it doesn’t change the nature of the tax as a tax on income,” Nelsen said.

At his 2:15 p.m. bill signing, Inslee also signed a bill to fund the Working Families Tax Credit, which efforts to put more money into the hands of low-income people.

KIRO Radio’s Hanna Scott contributed to this report.

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Gov. Inslee signs Washington’s new capital gains tax