Supporters of a tax on capital gains are celebrating a victory in the Washington state Legislature.
The 7% tax applies to the sale of stocks, bonds and other high-end assets in amounts higher than $250,000. There are a number of exceptions, including for real estate, agricultural land and family-owned small businesses.
The funds will be used to fund education, early learning and child care. Mike Yestramski, president of the Washington Federation of State Employees, said fewer than 1% of Washingtonians will pay the tax.
“This tax does not affect the vast majority of Washingtonians, as far as paying for it,” said Yestramski. “But it would benefit pretty much every citizen of the state, through being able to help adequately fund all of these public services that we enjoy.”
The tax is expected to bring in $415 million in 2023 to the state budget. It’s estimated to affect about 7000 families, according to a fiscal analysis of the bill.
Opponents say it resembles an income tax, which is unconstitutional in the state, and have already filed a legal challenge.
Experts say Washington has the most regressive tax code in the nation, with the lowest-income residents paying nearly 18% of their wages in taxes and the top 1% paying only 3% of their income.
Emily Parzybok is the executive director Balance Our Tax Code, a progressive coalition of groups that say Washington state’s tax code has been “upside-down” for too long.
“We know that budgets are moral documents that reflect community values,” said Parzybok. “And I think it’s really important to highlight not just whether or not we have a balanced budget, but on whose backs we’re actually balancing that budget.”
The bill currently awaits Gov. Jay Inslee’s signature.