Washington Legislature approves new capital positive aspects tax – KIRO 7 Information Seattle

OLYMPIA, Washington. – A new capital gains tax on profitable stocks, bonds and other assets was approved by Washington lawmakers on Sunday and is now being passed on for signature by Governor Jay Inslee.

Once the law is signed, the measure will certainly face a legal challenge from opponents who claim the measure is an income tax in violation of the state constitution.

The measure was passed by the democratically led Senate with 25 to 24 votes on Sunday afternoon, after 52 to 44 votes had been cast in the House of Representatives on Saturday evening.

“This is a move to ask those who can pay a little more taxes to do it for all Washingtoners to create a safer, healthier future for our state,” said Democratic Senator June Robinson.

The measure would impose a 7% tax on sales of stocks, bonds, and other high-end assets over $ 250,000 for individuals and couples.

Original versions of the capital gains tax saw $ 500 million a year, but the latest version, set by the House and Senate Democrats, is expected to raise $ 415 million in 2023, the first year the state see money out of the tax would. that would start in 2022.

Business owners are exempt from tax if they have been consistently running the business for five of the last ten years prior to the sale, owned it for at least five years, and grossed $ 10 million or less for one year prior to the sale.

Retirement accounts, real estate, agriculture and forestry would be exempt from the proposed tax. A new element added to the bill during the negotiations was that a taxpayer could deduct up to $ 100,000 per year from his capital gains if he made more than $ 250,000 in charitable donations in the same tax year.

The language added in the house says the tax is necessary “to support the state government and its existing public institutions,” which essentially blocks a voter referendum from voting. The voters could take the initiative route, but there is a higher signature requirement than for referendums.

Republicans argued that the Democrats want the state Supreme Court to rule on income taxation before the public can. A graduated income tax was passed in 1932 on the initiative with around 70% of the vote. But it was rejected by the state’s Supreme Court a year later, indicating the state constitution’s requirement for uniform taxation of property.

“I think the intent of this bill is to bring it to the Supreme Court so that it can pave the way for what is known as a progressive income tax in this state,” said Republican Senator Keith Wagoner.