Sunday, February 28, 2021

Olympia This Week - The all income tax edition

New survey finds Washingtonians strongly oppose tax increases  (Opportunity Washington Survey [PDF])

Democrats are proposing a litany of new taxes this legislative session. Democrats’ tax-first agenda begs the question, how do the people of Washington feel about more or higher taxes? Opportunity WA conducted a recent survey that sheds light on public opinion. The survey found that only 19% of Washington voters think taxes should increase, and even that number is declining (see page 5 of the survey).

The survey also found the majority of voters oppose an income tax on capital gains, like Democrats’ SB 5096.

Voters also believe that economic recovery is the most serious issue facing our state today. They also believe it is a better time to reduce taxes to ensure businesses can survive the pandemic than to increase taxes to fund more services.

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The Seattle Times urges Democrats to drop capital gains income tax proposal  (Seattle Times)

The Seattle Times Editorial Board urged Jay Inslee and his fellow Democrats to drop their “hasty, flawed” state capital gains income tax proposal.

The Democrats' new tax proposal – according to the editorial board – is “too flawed and should be abandoned.” The Times goes on, “This bill’s deficiencies are numerous.

There is no clear justification for raising the money, because there are few specifics available for what it will go toward.

It is virtually certain to tie the state up in court litigating whether it’s a constitutionally prohibited income tax.

And it perpetuates the Legislature’s troubling misuse of emergency clauses to thwart potential voter challenges.”

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The Walla Walla Union-Bulletin Editorial Board: Democrats trying to fool public (Union Bulletin)

The Walla Walla Union-Bulletin Editorial Board isn’t buying Washington Democrats’ insistence that a capital gains tax is not a form of income tax.

The Editorial Board writes that Democrats “seem to be trying to fool the public, and perhaps themselves.” The piece continues, “The federal government considers money gained through the sale of a capital asset — such as stocks and bonds — as taxable income. How is the capital gains tax being seriously considered in the state Senate any different? It isn’t.”

Importantly, the Editorial Board notes that the “only way to legally impose an income tax is to change the state Constitution. Washington voters have so far rejected the concept 10 times.”  Clearly the Democrats don't care what the voters think on this one.

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Democrats’ state capital gains income tax will face legal challenge  (Seattle Times)

Washington Republicans are standing firm on Democrats’ latest attempt to impose a state capital gains income tax. After all, the tax is unconstitutional and – contrary to Democrats’ claims – not necessary to balance the state budget, thanks to higher than projected revenue.

If Democrat lawmakers pass a state capital gains income tax this legislative session, their volatile tax will face a legal challenge.

While Democrats are attempting to categorize the tax as a form of excise tax, the IRS categorizes a tax on capital gains as an income tax. As Sen. Lynda Wilson, R-Vancouver, told the Seattle Times, “We have to remind ourselves that the IRS says that this is an income tax … and a very volatile one at that.”

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The state legislature is closer than ever to passing an income tax in Washington state this year. Emails collected through public records make it clear this income tax on capital gains is designed as a "starter tax" with more income taxes to come that will impact every citizen.

It's a volatile tax that will destroy Washington's "no income tax advantage" for attracting new businesses, high-tech start-ups and the jobs that come with them. And while advocates claim they are inspired to enact income taxes because of the burden on low income taxpayers, there is NO consideration of a sales tax or other cuts that could reduce that burden without destroying Washington's competitive advantage.

Sign Washington Policy Center’s No Income Tax for WA State petition and have your voice heard to Keep Washington State Income Tax Free Petition.

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