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“The Impact”: Capital gains tax clears Senate; Debating neck restraints, no-knock warrants & police oversight bills

“The Impact”: Capital gains tax clears Senate; Debating neck restraints, no-knock warrants &  police oversight bills

Watch “The Impact” – March 10th, 2021 here.

Olympia watchers from the Washington State Budget and Policy Center and the Washington Research Council join us to discuss the Washington State Senate’s passage of a capital gains tax bill over the weekend.

Engrossed Substitute Senate Bill 5096  sponsored by Sen. June Robinson (D-Everett) and requested by  Governor Jay Inslee’s administration would create a 7% capital gains tax on profits from the sale of stocks and bonds worth more than $250,000.

Twenty-five senate democrats voted in favor of the bill. Four democrats joined twenty republicans in voting against it.

A number of republican amendments were defeated, including one from Senator Phil Fortunato which would have made the tax voluntary.

Three amendments were adopted, including a striking amendment from the sponsor that spells out where the money would go.

Under the Robinson amendment the first $350 million from the capital gains tax would go to the Education Legacy Trust Fund, the next $100 million would go to the state General Fund, and the remainder would be directed to a newly created “taxpayer fairness account.”

Another last minute change came in the form of an amendment submitted by Sen. Steve Hobbs (D-Lake Stevens) which removed the emergency clause that would have prevented a referendum effort.  Hobbs was one of the four Senate Democrats who voted no on the capital gains tax bill.  The bill is now in the House of Representatives having survived the March 9th House of Origin Cutoff deadline.

Advocates of establishing a state capital gains tax argue it will help fund services like childcare through a targeted tax on some of the state’s most affluent people

 “This legislation is really important. It’s something that the Budget and Policy Center has been supporting for a number of years,” said Misha Werschkul, Executive Director, Washington State Budget and Policy Center.

“You know study after study tells the same story. The lowest income Washingtonians are paying a disproportionate amount of their income in state and local taxes while the wealthiest are getting a special deal,” said Werschkul. “Often not recognized is even the high effective tax rate our state puts on undocumented immigrants, the highest effective tax rate in the country, so it’s really unsustainable and inequitable and time to fix it.”

Research Director for the Washington Research Council Kriss Sjoblom says the state’s tax structure isn’t really as regressive as it’s often described.

“It is moderately regressive. The studies often cited overstate the regressivity of the state tax system,” said Sjoblom, “Whether or not there is a referendum clause when passed, this measure will go before the voters, as an initiative or as a referendum… …a majority of voters when asked were opposed to a capital gains tax.”

“This tax is small enough that it’s not going to move the needle on regressivity  that much,” said Sjoblom. “It also modestly reduces the attractiveness of Washington state   as a place to live if you have a high net worth and it also reduces the attractiveness as a place to start a business.”

Also this week, leaders from the Senate Law and Justice Committee weigh in on various bills to restrict police tactics and implement more oversight of law enforcement.

They also discuss the landmark Washington Supreme Court ruling that struck down the state’s criminal drug possession statute.

  “The supreme court does what it does. It’s quite a sweeping decision and a little surprising, I think, that they would take that step,” said Sen Jamie Pedersen (D-Seattle), Chair, Senate Law and Justice Committee.

“That’s going to mean resentencing of a lot of folks,” said Sen. Mike Padden (R-Spokane Valley), Ranking Member, Senate Law and Justice Committee.

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