Washington state policy makers often feel boxed in when it comes to taxes – hold on a minute, Tim Eyman – in that the state doesn’t use income taxes. That eliminates a good deal of the relative flexibility Idaho and Oregon have, especially since the big single remaining tax, the sales tax, is regressive. There are a range of other taxes and fees, but a good deal of upper-level income remains untouched.
The Washington Budget & Policy Center (a private, not public organization) has a suggestion: Tax capital gains, that is, on sale of stocks, bonds, precious metals and property. Ordinarily, it is taxed at rates lower than wages. It also is the source of much of the income, at upper income levels, at upper income brackets.
Partly because taxing of capital gains is usually linked to income taxes (though they’re not the same thing), Washington hasn’t taxed capital gains – at all. Only six other states likewise do not. Idaho taxes capital gains at 7.8%, which is above the national average, and Oregon’s CG tax, at 11%, is the high such state tax in the country.
The Budget & Policy Center, in a report out today, called for a Washington state 5% capital gains tax, which would still be lower than its neighbors. It said, “Depending on the structure, a tax on capital gains could generate up to $1 billion each year in much needed resources. The tax would improve our entire revenue structure, making it a more robust and sustainable system of financing important public priorities. Wisely devoting up to 50 percent of the resources created under the proposal to our state Rainy Day Fund would lessen the severity of future recessions by maintaining vital public health and family support systems when they are most needed. Finally, resources from a capital gains tax could be used to lower taxes for the majority of Washingtonians – especially lower-and middle income families.”
Blowback from the anti-tax crowd and the business lobby can begin forthwith.Share on Facebook