It’s not difficult to see why liberal progressives are pleased with the state House Democrats’ $39 billion budget. After all, it follows Jay Inslee’s lead and includes a historic $5.2 billion spending increase (up 15.4% from the last budget) and a state capital gains income tax. The only real budget element liberals have to lament is the lack of Inslee’s beloved cap-and-tax scheme—though Shift was the lone media voice pointing out that it was House Democrats, not legislative Republicans, who could not provide enough support to pass Inslee’s gas-price raising scheme in the weeks leading up to the budget introduction.
Fuse Washington, a far-left advocacy organization underwritten by rich Seattle liberals, praised the House Democrats’ budget as “good news” immediately following its introduction—so soon after its introduction, in fact, that one assumes that Fuse had received the budget details – and supportive talking points – before it was released to the public. In an email to supporters, Fuse labeled House Democrats’ budget as a “proposal that charts a [liberal] progressive course for Washington.”
Specifically, Fuse states it is “thrilled” that Democrats placed a state capital gains income tax as the “centerpiece of the House budget.” It claims that a state capital gains income tax is “a long-term reform that would put us on track for a sustainable budget.”
Just to be clear, the far-left activists over a Fuse are “thrilled” that House Democrats based their budget on a tax that is notorious for its volatility. And, they claim that this same volatile tax would somehow place Washington State on track for budget sustainability.
As Shift has reported, a state capital gains income tax is extremely risky, and thus an unreliable source of revenue. For Democrats to place the tax as the “centerpiece” of their budget is irresponsible. The fact that Democrats rely on a state capital gains income tax to fund K-12 education as directed by the state Supreme Court makes the House budget, simply put, reckless.
The history of the state capital gains income tax in other states proves its volatility. California’s Legislative Budget Office (LAO) advised that the best way for the state to limit exposure to “to the kind of extreme revenue volatility experienced in the past decade would be to reduce its dependence on the source of income that produced the greatest portion of this revenue volatility—namely, capital gains…” Standard & Poor’s warned that state tax revenue trends have become “volatile as progressive tax states have come to rely more heavily on capital gains from top earners.”
Volatility is not the only characteristic of the “centerpiece” of Democrats’ budget that makes it unreliable. A state capital gains income tax is just another form of a state income tax. If classified as an income tax (and not an excise tax, as Democrats claim), the proposed state capital gains income tax is unconstitutional. As the Washington Policy Center points out, “Under the state constitution, property cannot be taxed at a rate greater than 1 percent and the taxes must be uniform. The state Supreme Court has repeatedly ruled that “income” is property and that taxes on income must conform to the 1 percent limit.”
Democrats and their far-left supports justify a state capital gains income tax by falsely claiming the new tax is needed to meet the state Supreme Court’s McCleary decision to fully fund our public schools. That’s simply not true, as GOP state Sen. Andy Hill pointed out. Following House Democrats’ introduction of their budget, Hill cited the state’s projected revenue increase of $3 billion over the next two years, and re-iterated what he has said from the beginning: “Tax increases should be the last resort, not the first response.”
Democrats need new taxes not to meet their constitutional obligation and appropriately fund our schools, but to reward their million-dollar campaign donors—including the Washington Education Association, the Washington Federation of State Employees and the Service Employees International Union (SEIU) —with nearly a billion dollars in pay raises.
House Democrats introduced a budget that relies heavily on a volatile, unreliable state capital gains tax—it’s the budget “centerpiece,” as Fuse put it. That’s nothing to be “thrilled” about. In fact, it just proves that Democrats have reverted back to their old ways and are refusing to prioritize education. Once again, they have placed special interests before education funding.
Eastside Sanity says
Democrats always take from us. Their just a bunch of criminals.
Jim Thomas says
As always a wolf in sheeps clothing is still a wolf and you can’t hide the fact that this is an unconstitutional tax just because a bunch of wacko Libs decide to call it by some other name. What part of the word “responsible” don’t they get?
A state capital gains tax would affect approximately 30,000 of the state’s highest earners. Since we live in a state of roughly 7 million, that means less than one percent of the population would see a tax increase. We’re one of only eight states who currently don’t have a capital gains tax. It’s no wonder why Washington’s tax code has been analyzed and deemed the most regressive in the nation–by far. (see the article referenced below) It shouldn’t be about left vs. right. It should be about everyone paying their equitable fair share.
Such a bunch of bs. Fair share? What’s fair J? It’s not your money, and the fact that you’re a patsy for falling for the liberal class warfare nonsense just reveals to everyone that you believe you have a right to someone else’s earnings or inheritance. YOU DON’T and neither do I. Estates have been taxed umpteen times over the years and it belongs with the family that actually ‘earned’ it. Now that would be fair but to class warfare greedy simpletons, you don’t care about fairness, it’s all about getting your greedy, grubby hands on wealth you have no right to. Stop your envy and get a life, better yet get a job, improve yourself and perhaps you’ll have an estate to will over to………..your family? or what you prefer, the state. It should be up to the estates heirs, not you or the government.
I should probably clear a couple things up before I respond to your emotionally charged response with little-to-no substance. I am a proud, right-leaning, gun carrying, college educated, middle aged, white male republican. I am a 19 year veteran of the US armed forces, which I still serve today. I have worked, full time, since the age of 18 and don’t expect anything that I haven’t earned myself. I have a good job, which allows me to provide for my four children and wife who doesn’t have to work. I, however, am also a strong Christian man who believes in doing the right thing, no matter how much it hurts.
In my post, I referenced actual statistics, facts and analytics. You, digger, responded with personal attacks and name calling. If you want to put me in my place, I suggest you try to keep up. I would be happy to have a thoughtful discourse on this subject, but you’d need to give me something to actually discuss. Try responding to the FACTS: The wealthiest 1% of Washington households receive close to 25% of the total earnings for all workers in the state. To be one of the 30,000 households in this group, you would need to earn at least $379K/yr. This group has an effective tax rate (percentage of income which goes to taxes) of 2.4% (fifth lowest in the nation). This is stark contrast to the lowest paid 20%, which has an effective tax rate of 16.8% (highest in the nation). Again, Washington state is one of only eight states to NOT have a capital gains tax. These factual STATISTICS (which a reasonable person couldn’t pass off as “liberal class warfare nonsense”) result in what is ranked by economists as the most regressive tax system in the United States. You don’t have to take my word for it. Any internet search would bolster these assertions.
That being said, I suggest you actually LOOK at the current capital gains tax proposal. Single/Married households which earn over $500,000/$750,000 in capital gains-taxable income would be the ones affected. In those instances, only the amount OVER those thresholds would be taxed. When I pass, and I will my estate to my……….family, I wouldn’t even be touched. (As I’m sure you wouldn’t either.)
As I said in my first post, it shouldn’t be about rich/poor, left/right, conservative/liberal, or democrat/republican. It should be about everyone (myself included) paying their EQUITABLE share of taxes. If a hotel maid, a small engine repairman or a corrections officer have to pay 17% of their wages to state/local taxes, I find it hard to accept that a CEO or a venture capitalist has to pay less than 3%. THAT, sir, is not what I consider to be fair.
You skip over the fact that the 8 states having no capital gains tax also have no income tax at all. It’s correctly called a “capital gains income tax”. Income taxes are prohibited by the WA state constitution. Even if that wasn’t the case, is this new tax going to lower the tax burden on Joe Average? Something more EQUITABLE? What taxes on the lowest 20% will be going away? None. Nothing. This is just the Left’s insatiable lust for more revenue to squander and when it’s gone, expect those lofty limits to nose-dive down to “everybody pays income tax”
Amen, Biff. I completely agree that the left is notorious for needing to do better with what they have. I also agree that “Joe Average” is burdened enough. I wouldn’t mind cutting spending by overhauling the state welfare system, or by eliminating half of the unnecessary administrative positions. In the meantime, however, I am favor of is tax rates for the wealthiest to at least equal that of workers like say…you, digger or myself.
Better start that constitutional amendment process, then. If you’re going that far, go for something truly equitable like a flat tax on everybody and eliminate the sales tax, gas tax, outrageous liquor taxes, etc. that fall on the poor and middle class way more than the wealthy. That’s true equity. A capital gains tax without a repeal of other taxes is all about punishing the wealthy and growing government and nothing at all about equity.