You can help repeal Washington’s capital gains tax

You can help repeal Washington’s capital gains tax

In Washington state, some politicians are trying to weaken a key protection for every taxpayer.

But voters now have a window of opportunity to stop them in their tracks.

Here’s how their scheme works – and simple steps voters can take to protect Washington family businesses.

How lawmakers skirted Washington’s taxpayer protections

The Washington Constitution caps income tax at 1%. However, aiming to circumvent this restriction, the Democratic leadership, including Gov. Jay Inslee, introduced a 7% tax on capital gains over $250,000 from selling specific assets (like stocks, bonds and treasured family heirlooms– even if they were out of state at the time of the sale). This tax punishes business owners who are trying to build something for themselves, their families and the state. 

Rather than labeling it an income tax, lawmakers called it an “excise tax” on transactions. While this rebranding was approved by the state Supreme Court, it clashes with federal law and poses the question of what states can tax beyond their boundaries. 

Washington is currently the only state in the nation that does not consider capital gains as income. 

How voters can fight back

Just because Washington’s Supreme Court gave it a thumbs-up doesn’t make it right. The U.S. Supreme Court should recognize this for the constitutional evasion that it is – and we hope they will. But Washingtonians also have power that they can exercise to make this right. 

Ballot Initiative I-2109 would repeal this tax and any excise tax imposed on the sale or exchange of certain long-term capital assets by individuals who have annual capital gains of over $250,000. 

Your signature is critical to getting this repeal passed, and all signatures need to happen in person – not online. Find a signing location here and make sure you sign as soon as possible to make sure your voice is heard. If enough signatures are collected, state lawmakers can either choose to repeal the tax immediately or let voters decide in November 2024. 

As of now, the Supreme Court has not yet decided if they will hear the case at all. The Wall Street Journal editorial board reported on this, calling Washington’s capital gains tax “the state’s excise shenanigan” and “a two-faced tax.” They explained, “Perhaps Mr. Inslee and the Legislature couldn’t help themselves, but creativity and lawmaking rarely go together well, and sometimes they run up against the Constitution.” They aren’t the only outlet to notice. GeekWire published a list of 7 reasons why capital gains tax is bad for Washington state. 

And moves like these have consequences. Jeff Bezos is moving to Florida (where there is no income tax). Lawmakers in Washington were doubtless counting on the capital gains pulling billions from his bank account, and now they won’t even get the 1% they’d been getting in income taxes. Most of the people who will be hurt by this legislation aren’t billionaires. They’re regular innovators and family businesses who are working to invest in Washington. 

It’s up to the taxpayers to remind Inslee and other lawmakers that we need and want to make this a state where they can thrive. Find a signing location near you today and add your name to the list of Washingtonians who support I-2109. Let’s repeal the capital gains tax and restore sense in Washington. 

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