LOCAL NEWS

New initiative backed by conservative donors takes aim at Washington capital gains tax

Mar 22, 2022, 10:42 AM | Updated: Mar 23, 2022, 2:55 pm
Income tax, capital gains tax...
(Photo Illustration by Scott Olson/Getty Images)
(Photo Illustration by Scott Olson/Getty Images)

There are currently four separate pushes to create a ballot initiative to repeal Washington’s recently-implemented capital gains tax, with the latest effort entering the fray with tens of thousands of dollars of PAC money in tow.

Court battle over capital gains tax could rewrite Washington’s tax code

The initiative was filed Monday night by Chehalis attorney J. Vander Stoep, backed by a committee registered with the state as “Repeal the Capital Gains Income Tax.” In practice, it would repeal SB 5096 — signed into law last year and effective since January 2022 — which created a 7% excise tax on the sale or exchange of capital assets above $250,000.

In its text, the initiative alleges that state lawmakers “will continue to try and impose taxes on different forms of income” if the capital gains tax is allowed to remain in place, “despite voters repeatedly rejecting such taxes.”

The committee has raised a total of $5,200 since it was registered in December of 2021, but also has $45,000 in pledges lined up from a collection of prominent conservative Washington donors. That includes a $5,000 pledge from former Republican gubernatorial candidate Bill Bryant, $20,000 each from Taiyo Pacific Partners CEO Brian Heywood and former trucking company head Steve Gordon, and $5,000 from former Starbucks executive Howard Behar.

Both Heywood and Gordon have long thrown their support behind anti-tax initiatives in Washington, in addition to both contributing large sums to the Republican Party in the lead-up to the 2020 election.

State lawmaker: Capital gains tax is just ‘parity in the tax code’

Their effort is being opposed by a group known as Invest in Washington Now, led by Treasure Mackley, a former vice president at Planned Parenthood. In a press release sent Tuesday, it claimed that the initiative repealing the state’s capital gains tax would take $500 million annually from funding for repairs to aging schools, the creation of new preschools and child care centers, and assistance for students with disabilities.

“We won’t let a few super-rich people give themselves a huge tax cut, forcing the rest of us to pay more,” Mackley said. “Poll after poll shows voters strongly support making the rich pay what they owe our communities.”

That all being so, the initiative could also end up being a moot point by the time it would go in front of voters. In early March, a Douglas County Superior Court ruled the tax unconstitutional, siding with plaintiffs in supporting their definition of capital gains as income. The capital gains tax remains in place in the meantime ahead of a yet-to-be-determined date with the Washington Supreme Court.

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New initiative backed by conservative donors takes aim at Washington capital gains tax