Washington state doesn’t have a funding problem. It has a spending and leadership problem
A recent article in favor of Washington’s illegal capital gains tax touted the necessity and fairness of the tax on the basis that the funds are needed for early childhood education and implying that these programs would be at risk without this tax.
Proclaiming this new tax as necessary to fund needed programming in Washington State is 100% false. Over the past ten years, Washington’s tax revenues have increased 86% under the existing tax code while our population increased just 13.5%. In the last year, the state’s estimated tax revenue over the next four years will exceed budget by $10.5 billion. This windfall does not even include the injection of federal funds tied to Covid/infrastructure spending, nor does it include the additional $400 million expected from the capital gains tax.
Good political leadership would use this surplus on much-needed programs for children and infrastructure. Or look to reduce the regressive sales tax that most directly impacts low-income households as Senate Democratic Majority Caucus Vice Chair Mona Das proposed in SB 5932. Instead, in its recent session the democratic legislature avoided any discussion on tax cuts and opted to increase wages for government workers. Washington is currently the only state in the union with a tax surplus that has not proposed meaningful tax relief.
We do not have a funding problem in Washington, we have a spending and leadership issue.
On the issue of fairness, proponents of Washington’s capital gains income tax were sneaky and disingenuous when passing an illegal “excise tax” under an emergency measure which prevented a voter repeal of the tax. They were dishonest about the purpose of the tax and even mislabeled it an excise tax to avoid voter scrutiny over an “income tax.” Even the authors of a recent pro-income tax article refer to this as an income tax (which is illegal under the Washington constitution), rather than an excise tax.
Furthermore, and most problematic, the illegal capital gains tax is a first move in a long-term strategy to circumvent voters who’ve struck down 10 previous income tax proposals. Olympia is banking on the courts breaking 90+ years of legal precedent, thereby allowing for a tax that 63% of Washington voters opposed in 2021’s advisory vote.
If the capital gains tax remains in place, it will embolden democrats to pursue a broader state income tax affecting standard wages, retirement accounts, and residential real estate in the near future. Every Washingtonian is at risk, but a broad sweeping income tax would disproportionately impact lower- and middle-income citizens receiving hourly and salaried income.
Washington possesses a vibrant business and agricultural community consisting of hard-working farmers, entrepreneurs, and business owners. This ecosystem is part of the reason Washington state tax revenues nearly doubled over the past ten years and a predicted robust surplus. As we ease out of a global pandemic and enter a period in which (a) jobs are more mobile than ever and (b) we are losing two farms per week in Washington, adding further burden to taxpayers in a state flush with income is not only counter-productive, but also destructive to the long-term health of our state.
As a result, the Washington Farm Bureau and other plaintiffs from the agricultural and business communities are suing Washington state in Douglas County Superior Court to strike down the illegal tax. As a small business owner and the president of the Opportunity for All Coalition (OFAC), I support the will of the voters and OFAC is committed to this fight.