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Opponents of initiative to repeal WA capital gains tax hit campaign trail

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(The Center Square) – Backers of the NO on Initiative 2109 campaign are off and running.

I-2109, set for the ballot in November, asks voters to repeal the capital gains tax.

State lawmakers passed a capital gains tax in 2021. It taxes 7% on the sale of stocks and bonds and other assets above $250,000, with some exemptions.

“The first year it brought in $896 million which was over what was estimated,” said Treasure Mackley with the No on 2109 campaign, who spoke with The Center Square. “That goes to show how much wealth we have here in Washington state.”

But the actual profits from the tax came into question this week when the Washington Research Council released new numbers.

As of Jan. 2024, Department of Revenue had reported that TY (tax year) 2022 capital gains collections totaled $896 million. However, based on the new information from DOR, it appears that additional late payments and refunds for TY 2022 reduced (on net) the total collected for TY 2022 to $786 million.

According to the Research Council, “DOR reports that 3,850 capital gains tax returns were filed for TY 2023. (3,895 returns were filed for TY 2022.)”

The tax took effect on Jan. 1, 2022. There was a lawsuit over the tax and in March 2022, the Douglas County Superior Court ruled that the capital gains excise tax was unconstitutional and invalid, because it is an income tax.

The case was appealed to the state Supreme Court. In March 2023, the state Supreme Court ruled the capital gains tax is an excise tax on capital gains and therefore constitutional and valid.

The money generated by the tax goes to childcare subsidies, bonuses for childcare centers, early learning programs and school construction.

“What’s really at stake is hundreds of millions of dollars to support childcare and early learning and 2109 seeks to take that away, and line the pockets of the wealthiest Washingtonians,” said Mackey.

“We are a broad coalition of organizations and people from all across the state. We have educators and childcare providers, Save the Children and others dedicated to fighting for our children and schools in every corner of the state.”

Republican Party Chairman, Rep. Jim Walsh, Aberdeen, tells The Center Square, “The hard left in Washington needs to get its story straight. It’s leaders complain that the state capital gains tax already causes a budget hole because receipts are way down this year. At the same time they complain that its repeal will cause another budget hole next year. That’s a lot of budget holes.”

He continued, “For Chicken Little, the sky is always falling, but the truth is tax-and-spend leftists don’t understand anything about economics. They just want more of your money and their greed is unlimited.”

Walsh says passage of I-2109 will help Washington keep more companies here and that means more jobs.