After hours of debate, the House passed the Senate Capital Gains Tax Act on Wednesday by 52 votes to 46, bringing the Democrats one step closer to realigning tax legislation in Washington. The bill is now being returned to the Senate for final approval.
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The bill provides a seven percent tax on capital gains in excess of $ 250,000 made from the sale of long-term assets. The final passage of the bill would be a turning point for the Legislative Democrats, who have long sought to adjust Washington’s tax structure – considered the most regressive in the nation.
Today we are going to take another gigantic step towards justice for the working people of Washington State by finally asking the richest of us to pay their fair share. And that’s what we’re going to do by passing this capital gains tax on the extraordinary gains on stocks, bonds and other investments, ”said Rep. Noel Frame (D – Seattle). Washington State has the wickedest and most regressive tax laws in the nation. It’s a tax code that tells lowest-income Washingtoners to pay six times more taxes as a percentage of their income compared to our highest-income households.
Republicans and opponents of the legislation say the bill is based on a false premise and will open the door to a broader restructuring of Washington’s tax law. They argue that a capital gains tax is an income tax and therefore illegal under state law.
The US Supreme Court, the IRS, and any state with a capital gains tax consider this to be income tax. This brings us dangerously close to becoming a rainier version of California – a state where businesses and people are leaving in so great numbers that for the first time since joining the union in 1850, it is expected to be this year Loses Congress seat. Please stop the decline of our great state, ”said Rep. Jeremie Dufault (R – Selah).
Washington voters approved a tiered income tax on initiative in 1932. While the initiative was passed in a landslide, the state Supreme Court ruled that it violated the state constitution’s mandate of uniform taxation of property. Proponents of the bill argue that it is a consumption tax because it imposes a tax on the sale of an asset rather than a stationary asset.
In a four-hour debate that lasted at 10 p.m. on Tuesday evening, the Democrats rejected 18 out of 19 Republican amendments. During Wednesday’s final vote, Republicans were united in their opposition to the law, and five Democrats broke their caucus to vote no. Republican MP Bruce Chandler mistakenly voted yes on the first pass, resulting in a new vote.
While an emergency clause has not been re-added, the question now arises whether moderate Democrats will sign the language that the tax describes as “necessary” to support the state government and its existing public institutions. Opponents say the language will prevent voters from holding a referendum on the bill.
As the tax aims to offset Washington’s tax code and address shortcomings in the childcare system, MP Tana Senn said the language is not an emergency clause but a “necessity clause” highlighting key government priorities: “Why should we refuse funding.” ? Early learning and childcare? “Asked Senn.
Republicans say Democrats could have funded these priorities regardless of new taxes because they hold the majority and run the budget.
At a press conference on Wednesday, Senate Minority Chairman John Braun said an initiative, an alternative to a referendum, would likely not be on the ballot this year, but he left the option to ask voters in the 2022 cycle .
Removing an emergency clause from the original bill made the bill more amendable for some moderate Democrats. The bill was passed in the Senate with the closest gap (25-24). On the way back to the chamber for the final passage, local democratic and progressive organizations have begun to exert pressure.
When Bruce Cowan, chairman of the Democrats for the 24th Legislative District, came to comment after the House vote, he said the following:
Our democratic platform supports a state capital gains tax because it would make our taxes fairer and finance necessary programs. As chairman of the 24th LD Democrats, I urge the members of our delegation to support this bill.
The 24th LD is represented by Senator Kevin Van Dewege (D-Sequim), who voted in favor of the bill after the emergency clause was lifted.
Washington’s tax structure is by far the most unfair in the country, which puts a heavy burden on low-income people and makes income inequality so much worse, “continued Cowan. “The Republican legislature seems to be okay with the status quo. The voters want a fair system. Even Idaho has a better tax structure than we do. This excise tax on capital gains of the very rich would be a step towards making our tax structure fairer. In blocking this bill, Republicans are saying they don’t believe the rich should pay their fair share.
Three Senate Democrats – Sens. Steve Hobbs (Everett), Annette Cleveland (Vancouver) and Mark Mullet (Issaquah) voted no before being sent to the house. Senate Majority Leader Andy Billig (Spokane) didn’t say definitely whether he believes the original 25 votes are still there, but said a solution would be found at the conference.
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