Group behind initiative to repeal capital gains tax clashes with AG over how it would appear on ballot

Apr 13, 2022, 8:31 AM

Bob Ferguson...

Washington Attorney General Bob Ferguson speaks before Gov. Jay Inslee signed a package of bills. (AP Photo/Ted S. Warren)

(AP Photo/Ted S. Warren)

The group behind an initiative seeking to overturn Washington’s capital gains tax filed a challenge this week over how it would appear on the ballot.

New ballot initiative takes aim at Washington capital gains tax

Registered as I-1929, the ballot initiative would repeal SB 5096, which created a 7% tax on the sale or exchange of capital assets above $250,000. While the bill defines the levy as an excise tax, a Douglas County Superior Court judge ruled in early March that it qualified as a graduated income tax, which would violate Washington’s state constitution.

During the last legislative session, lawmakers approved a new measure that made Attorney General Ferguson responsible for drafting the titles and summaries for ballot initiatives as they would appear to voters. For I-1929, Ferguson’s summary describes the levy as an excise tax, despite the recent court ruling asserting otherwise.

The initiative’s sponsors took issue with that this week, claiming in a legal challenged filed in Thurston County Superior Court that Ferguson’s description is “misleading, imprecise, and will likely cause confusion and improper bias in opposition to the initiative.”

In a written response, a spokesperson for Ferguson’s office countered by noting that the Douglas County court ruling “is not final,” as it is currently in the process of being appealed to the Supreme Court of Washington, and as such, “is not binding.”

Figuring out how state Supreme Court might rule on challenge to capital gains tax

“All the parties recognize this case will ultimately be decided by the State Supreme Court,” spokesperson Brionna Aho told MyNorthwest. “There is nothing disingenuous about using the Legislature’s accurate characterization of a statute to describe the statute.”

Currently, Ferguson is awaiting word from the state Supreme Court on a request for direct review, which would bypass the lower appeals court and allow for a more expedited timeline to deliver a final ruling. In the interim, the tax remains in effect pending that action.

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Group behind initiative to repeal capital gains tax clashes with AG over how it would appear on ballot