Capital gains tax bill inches closer to governor’s desk

In a 52-46 vote, the Washington state House passed legislation during a virtual legislative debate Wednesday to impose a capital gains tax starting next year. The bill will return to the Senate to consider the House’s amendments.

Senate Bill 5096 would place a 7% capital gains tax from the sale of “long-term capital assets” above $250,000, according to the bill’s text. Those who “knowingly attempt to evade payment” of the tax would face a Class C felony charge.

Under SB 5096, assets exempt from the tax include real estate and retirement accounts, among other things. Proceeds from the tax would be distributed to the state Education Legacy Trust Account, General Fund and Taxpayer Fairness Account.

Rep. Noel Frame, D-Seattle, said during the debate SB 5096 is a step towards justice for working Washingtonians as it will ask the wealthiest residents to pay their fair share.

“Washington state has the most upside-down and regressive tax code in the nation,” Frame said. “We must rebalance the tax code.”

Rep. Tom Dent, R-Moses Lake, said during the debate SB 5096 is not going to save child care as many proponents said it will. The 13th District has a “childcare desert” — this bill will not fix the lack of child care services in his district, he said.

“This is just a tax. It’s an income tax,” Dent said. “As soon as it’s passed and signed it’ll be in court.”

Rep. Joe Schmick, R-Colfax, said during the debate his district also lacks childcare services. With existing money, the Legislature can fund all that is needed regarding childcare, he said.

“I do not see the need for a new tax and new revenue,” Schmick said.

Rep. April Berg, D-Mill Creek, said during the debate not a single middle-class family will be affected by SB 5096. Investing in early learning and childcare services is “the best possible investment” the Legislature can make, she said.

“This legislation (gives) all students a chance, a fair start at life and an opportunity to thrive,” Berg said.

Rep. Jeremie Dufault, R-Selah, had an amendment that would allocate all tax proceeds into the state’s Fair Start for Kids Account, an account that would stem from SB 5237. His amendment was not adopted to SB 5096.

“(This amendment) ensures that the funds that are collected from this tax go to childcare and early learning,” Dufault said Tuesday, when the House began debating the bill.

Rep. Tom Dent, R-Moses Lake, voiced support for Dufault’s amendment during the debate Tuesday and said the Legislature may never know where the tax proceeds are really going, which concerns him.

“If it’s really for the children, let’s … send the money to the children,” Dent said.

The Senate passed SB 5096 on March 6 in a 25-24 vote. April 25 is the last day for this year’s state legislative session.