Could newly-enacted changes to ballot initiatives curtail effort to repeal capital gains tax?

Apr 15, 2022, 12:01 PM | Updated: 12:07 pm
Washington voting, ballot initiatives tax repeal...
(MyNorthwest photo)
(MyNorthwest photo)

Polling data released this week indicates that a newly-enacted bill which changes how ballot initiatives are presented to voters could curtail efforts to overturn Washington’s capital gains tax.

State lawmakers approve changes to how voter initiatives appear on ballots

That effort is taking the form of I-1929, which would repeal a 7% tax on the sale or exchange of capital assets above $250,000 approved in 2021. The initiative has already garnered over $211,000 in contributions from wealthy donors, with hundreds of thousands of dollars more in pledged donations.

Despite the assertion that the levy represents an income tax — which has regularly failed to gain traction with voters in past years — a bill passed during this year’s legislative session could throw a wrench into the works.

The bill, SHB 1876, makes it so that any ballot initiative that would impact taxes, fees, or “cause a net change in state revenue” must include an “impact statement” written by Attorney General Bob Ferguson that lays out the direct financial impact of the measure, explaining how it would increase or decrease funding for specific services. In the case of I-1929, polling data released this week by Public Polling Policy on behalf of Civic Ventures demonstrated the effect this might have come November.

The data was divided between two surveys — one asking 553 likely Washington voters whether they would support a repeal of the state’s capital gains tax based on a brief description of I-1929, and another asking a separate group of 572 voters whether they would support the initiative as it would appear on the ballot with the requisite impact statement, adding how it would “decrease funding for education, early learning, child care and school construction.”

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

In the first survey, 40% said they would vote in favor of I-1929, with 39% opposed, and another 20% saying they were unsure. The second survey showed support for the initiative dip to 37% with the impact statement included, with “no” votes rising to 49%, and the percentage of people who were uncertain dropping to 14%. The rise in opposition to I-1929 in the second survey was also consistent across “all age groups and political affiliations.”

This also comes while the sponsors behind the initiative are challenging Ferguson’s ballot title and summary — which does not yet include an impact statement — for describing the capital gains levy as an excise tax rather than an income tax, in light of a recent court ruling asserting its status as the latter.

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.”

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Could newly-enacted changes to ballot initiatives curtail effort to repeal capital gains tax?