In a state known for firsts, why is Washington behind every other state when it comes to our tax code? With a growing economy and a booming population, we should we have the resources to fund the best schools and infrastructure in the nation.
The answer is rooted in our upside down tax code. Those who earn the least, pay a disproportionately large share of their incomes in taxes; while those at the top pay the lowest effective tax rates. With our current system, there’s no way for revenue to keep up with our growing state. So, instead of all the achievements we could accomplish together, Washington’s State Supreme Court has declared our schools unconstitutionally underfunded. We must do better.
The way forward is clear: we have to eliminate the wasteful tax breaks that powerful interests have manipulated into our tax code. For example, Washington is one of only nine states to not tax capital gains.
What are capital gains?
Capital gains are the profits from the sale of stocks, bonds, investment properties (not primary residences), and other financial instruments. These profits have to exceed $50,000 for married couples, and $25,000 for single folks, and don’t affect profits from primary residences and retirement funds. With all of these protections, a capital gains tax would affect very few people’s taxes. Most capital gains tax proposals would only affect the top 1-2 percent of earners – almost exclusively those at the top.
By ending the break that those at the top get by not paying these taxes, our state could easily raise up to a billion dollars per year. What does that look like for Washingtonians? In our current situation, that money could close the funding gap for basic education in Washington State. We could more than double our 2015 – 2017 capital budget for schools – that’s the money that builds and maintains safe school facilities for Washington’s students. Or we could increase our general funding for higher education by 20 percent. That would mean financial aid for deserving students and support for our state universities and community colleges.
We have a choice: we can continue to give the rich and powerful a tax break, or we can have great schools, modern infrastructure, and all the things that make Washington a great place to live. These foundations of a thriving state cost money. Our communities can thrive, and we can do great things, but you can’t get something for nothing.
A capital gains tax is a good idea for Washington.