(The Center Square) – Former Google engineer Vijay Boyapati and Dr. Stephan Blanford, executive director of the advocacy group Children’s Alliance, clashed on Initiative 2109 to repeal Washington state’s capital gains tax during a panel interview on TVW’s “The Impact” program.
In 2021, the state Legislature passed Senate Bill 5096 , which Gov. Jay Inslee signed into law. SB 5096 created a 7% tax on the sale or exchange of long-term capital assets such as stocks, bonds, business interests, or other investments and tangible assets. The law only covers gains above $262,000, an increase from $250,000 for the 2022 tax year, as the floor is tied to inflation.
The state's summer revenue forecast saw a dip of nearly $500 million, driven in part by a tumble in capital gains tax receipts. This means that the passage of I-2109 in November would complicate the state’s budget picture next session.
“Only .2% of all Washingtonians who pay taxes are actually subject to capital gains taxes,” Blanford said during Wednesday’s TVW broadcast in defending the tax. “These are the wealthiest people in this state who are subject to this tax, and it is only 7% of the profits they make when they sell assets.”
Boyapati, who earned his wealth during the early days of Google, disagreed.
“I chose 18 years ago to come to Seattle, and I strongly believe that the tax policy here is a primary reason that our tech sector and so many people have flourished and so many people have come here to start businesses,” he explained. “Creating a capital gains tax not only created a disincentive for people to come here, we created an incentive for people who do have large capital gains to leave.”
Blanford argued eliminating the tax would gut programs that needy families rely upon.
“Millions of dollars have already started to benefit schools and childcare centers, and it is abundantly clear that it is already benefiting children, at the cost of the .2% of Washingtonians who are the wealthiest you can imagine,” he explained.
Boyapati argued backers of the capital gains tax would use it to support a general income tax in Washington.
“You look at the history of the people who are proposing this; they always wanted an income tax in this state,” he said. “They tried seven times with an income tax and the people in the state kept striking it down.”
Since the 1930s, voters statewide have been asked to adopt an income tax multiple times, and they have said “no” each time.
“The Legislature went behind the people and passed this, and I think the people are going to strike this down again,” Boyapati said.
A legal challenge to the capital gains tax ultimately resulted in the state Supreme Court ruling in March 2023 that it is a valid excise tax under the state constitution.
Blanford circled back to the argument that the wealthiest Washingtonians would flee the state because of the capital gains tax.
“Some of the arguments that are being made are not based in fact; they are based in worst case scenario and trying to impress voters that you are going to have this mass exodus of taxpayers, which is not the case,” he said.
Amazon founder Jeff Bezos announced in November that he was leaving Seattle after nearly three decades to move to Miami, saying he wanted to be closer to his parents. Since announcing the move, Bezos has sold millions of Amazon shares.
A July poll conducted by SurveyUSA and commissioned by The Seattle Times found that voters supported I-2109 by a nearly 2-to-1 margin, with almost a third of likely voters in the poll undecided.
A September Cascade PBS/Elway poll found that 52% of those polled said they would vote “no” on I-2109.
Ballots for the Nov. 5 general election are expected to be mailed out in about a week.
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