Democrat goal of capital gains tax is ‘not to get this signed into law,’ but to get through the courts

State Senator Phil Fortunato (R-Auburn) was able to reestablish the state productivity board last week — which KTTH’s Jason Rantz calls “good news for taxpayers” — but Democrats in the state Senate passed the controversial capital gains tax over the weekend.

When the bill cleared the Ways and Means committee last month, it was reduced from 9% to a 7% tax on profits in excess of $250,000 on the sale of stocks and bonds for both individuals and couples, along with several other changes, such as excluding the sale of real estate and creating an exclusion for a “qualified family-owned small business.”

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Sen. Fortunato is not a fan of this tax, and had proposed making it voluntary, but that amendment was rejected.

“Well, we had multiple amendments but my favorite one was to make the thing totally voluntary,” Fortunato said. “People like Bill Gates and some other big millionaires — we heard testimony from Senator Dhingra that her district actually was begging to pay more taxes. So I said, if that’s the case, why don’t we just make this voluntary? They could figure out how much tax they owe, they could write a check and mail it in. And those of us that don’t want it, don’t have to pay it.”

Surprisingly, Fortunato jokes, it was voted down.

“If you live in the 45th legislative district and you don’t want to pay more taxes, tell [Senator] Manka [Dhingra],” he said.

As Jason asks, why do Democrats believe a capital gains tax will be accepted this time around?

“They know it’s not going to be accepted, they know it’s going to go the Supreme Count. They just believe the make up on the Supreme Court will have a different view,” Fortunato said. “And to be clear, an income tax is not unconstitutional. … What is unconstitutional is a graduated income tax where different people would pay different rates.”

“Of course their argument is everybody pays the same rate, but it’s only a few people,” he added.

But, he says, if one person pays nothing and another pays something then that’s a different rate.

“I want to make a point: Everybody is supposed to send in their IRS tax return to the Department of Revenue to determine whether or not you have a capital gains tax due to the state,” he said. “Talk about an invasion of privacy.”

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Fortunato also pointed out that even with three Democrats voting no, the bill still passed because the Democrats have the large majority. Fortunato says Democrats figure that the current make up in the House, Senate, and state Supreme Court will help the outcome to be different this time.

“The whole object is not to get this signed into law, the object is to get it through the courts,” he said.

Listen to the Jason Rantz Show weekday afternoons from 3 – 6 p.m. on KTTH 770 AM (or HD Radio 97.3 FM HD-Channel 3). Subscribe to the podcast here.