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House Democrats want to impose an income tax in Washington state

Opinion, One group’s 2-minute take on capital gains taxes

The Washington Policy Center's 2-minute argument that a capital gains tax is an income tax.
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The Washington Policy Center's 2-minute argument that a capital gains tax is an income tax.

In life there are close calls: the 2012 Monday Night Football Seahawks vs Green Bay Packers last-second Seattle touchdown known as the infamous “Fail Mary” by Packers fans and as a glorious stroke of luck in Seahawk fan lore; the 2000 presidential election results in Florida that narrowly led to a George W. Bush presidency.

Folks on the losing end may never fully accept these losses, but there’s no denying they were close calls.

Not a close call is whether some lawmakers are seeking to impose an income tax in Washington state right now in Olympia. The Democratic leadership of the state House of Representatives has included an income tax in their latest budget proposal. While they originally tried calling it an “excise tax,” and are now calling it an “excessive profits” tax, it’s still an income tax.

How do we know? The IRS says so.

On matters regarding taxes, that’s usually all the authority you need. But when it comes to Washington state, lawmakers advocating for an income tax on capital gains are seeking to camouflage their objective with denials and obfuscating language.

It’s easy to see why income tax proponents would prefer to hide what they are doing. Income taxes are unpopular in Washington. Voters in our state have rejected a state income tax 10 times at the ballot box, including when it was supposedly aimed at “the rich.”

Perhaps voters agree with our state Commerce Department, which reports that having no income tax is a key selling point for attracting jobs to our state.

Or maybe Washington voters recognize the history of federal income taxes, which started by targeting the rich and have spread to the point that Americans work dozens of hours every April just to deal with the complexity of their own tax filings.

It could be they are watching the steady growth of the income tax in Connecticut, the latest state to implement one, or that they’ve read the warnings from former California Gov. Jerry Brown, who notified California voters that income taxes on capital gains are too volatile to rely on.

Whatever reason it might be, income taxes are hugely unpopular in Washington state. Yet in the midst of flourishing state revenues, with lawmakers enjoying 10 percent growth in tax revenues and billions of additional dollars at their disposal, an income tax is now on the table.

It’s jaw-dropping that this and so many other taxes (payroll, energy, etc.) would be proposed with revenues so high and our state fresh off an election that saw the current majority party boosted at the ballot box while new taxes crashed and burned, but here we are.

The magnitude of this story has been somewhat blurred by proponents’ refusal to use upfront language about their own proposal.

When one looks at the overwhelming consensus among national tax organizations (conservative and liberal), state revenue departments, and the IRS, one can only marvel at the audacity of those still in denial that the tax they’ve proposed is an income tax.

It’s the political equivalent of watching that scene from the comedy classic, “The Naked Gun,” when Leslie Nielsen’s character, police Lt. Frank Drebin, stands in front of an exploding fireworks factory shouting, “Nothing to see here, folks, move along. Nothing to see ...”

This isn’t a #Fakenews issue. In my experience, reporters are out doing increasingly hard work and try to provide readers, listeners or viewers with key information under tight deadlines.

The challenge here is a language game. Just as American visitors to Britain frequently note, we are “separated by a common language,” so too are both sides of our political spectrum. Control the language and one controls the debate, so there is frequent jockeying over terms and definitions. Reporters using phrases radically diferent from one side can seem like they are advocating for the other, so they strike middle ground.

But in this instance, in the precise words of the IRS, “It is an income tax.”

And it’s not partisan or biased to report that fact.

Presumably, at some point advocates of the income tax on capital gains will be too embarrassed to deny it. When that happens, Washington state can finally have an honest debate about taxes.

David Boze is the communications director for the Washington Policy Center, a nonprofit research organization with offices in Tri-Cities, Spokane, Seattle and Olympia. Online at www.washingtonpolicy.org

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