WA Voters Defeat I-2109, Un-Constitutional Capital Gains Tax Remains

This hot-button issue might not have been clearly understood by many.

  WA Voters reject repealing the Capital Gains tax

I-2109 would have done away with what the State Supreme Court called an 'excise' tax, but the IRS and every other state considers a capital gains tax.

Capital gains are money people get from the sale of items such as stocks, bonds, real estate, or other large items. Jeff Bezos, Amazon founder, moved to Florida so he could selloff a huge amount of Amazon stock, because they don't have a capital gains tax.

He would have owed WA State $1.2 billion under the tax if he'd stayed.

According to Let.s Go WA:

"This measure would repeal an 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."

The measure failed by a margin of about 63 to 36 percent. The only counties that passed it were the group of conservative voters in Benton, Franklin, Adams, Grant, Lincoln, Douglas, Pend O'Oreille (NE of Spokane) Columbia, and Garfield Counties. Lewis County on the coast also passed it, as did Kittitas (Ellensburg).

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Strangely, Yakima County defeated the measure. There are fears among some legislators and business leaders that the legislature will attempt to expand this tax, and lower the threshold well below $250,000. That would mean a lot more upper-middle-class people would get taxed on sales of these assets.

The State Supreme Court called it an 'excise' tax, which is actually a tax on a transaction, not on the sale of the actual assets themselves.

Capital gains taxes tend to driver larger investors, businesspeople, and wealthier individuals out of a state, and can have significant impact on investments and the economy.