Dems Proposed State Budget ‘Tied’ to Capital Gains Income Tax
Senate GOP leaders Thursday praised some of the 2021-2023 biennial operations budget for Washington state, saying part of it mirrors their proposals as well.
However, GOP leaders were quick to point out some of the revenue sources in the Democrat proposal are linked or tied to a hot button issue: the proposed capital gains income tax.
Senate Ways and Means Committee GOP Senator Lynda Wilson of Vancouver said this about the Democratic proposal:
“The bad news is how this budget is tied to a tax proposal that is unnecessary, considering the amount of revenue already available as well as unconstitutional. We already know from other states that a tax on income from capital gains is a highly volatile source of revenue. Yet the Democrats have chosen to hitch their budget to a revenue source that is even less reliable – a capital-gains income tax which has a 50-50 chance of being found constitutional, and that’s only if SB 5096 reaches the state Supreme Court. It’s simply not good policy."
If the bill passes, it would most likely face a legal challenge, or a public referendum. By the time it actually went into effect, it would only provide revenue for the last quarter of the 2021-2023 operating budget, said Wilson.
Even the IRS considers a capital gains tax to be an income tax, according to critics of the bill. Although usually done at a lower rate, gains from the sale of stocks, bonds, real estate etc. generate what is considered income, which is still taxed.
The state Constitution considers capital gains as income, and forbids any such tax. Multiple times Washington citizens have voted down capital gains tax proposals.
Wilson and other GOP leaders are wary of why Democrats, spurred on by Gov. Inslee, are pursuing this controversial tax. Wilson said:
"Why tie a two-year budget to three months’ worth of revenue? Clearly another agenda is at play."
Here are a few folks who would be affected by capital gains taxes.
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