Dear Neighbor,
I send you this newsletter urgently on a Saturday, not because I want to, but because you need to know what your state government is doing outside of business hours. This session, I have shared details of the proposed income tax. Senate Bill 5096 was introduced which would impose a 7% tax on the selling of long-term capital assets, or on receiving Washington capital gains beginning January 1, 2022. To be clear, this tax is completely unnecessary. We have sufficient revenue to fully fund government without any additional revenue and without cuts in services to those in need.
Today, the Senate passed this legislation by a very thin margin 25-24. Senate Republicans introduced several amendments that were not accepted. They included:
- Exempting all real estate from this income tax
- Making the income tax voluntary
- Specifying that code references in this bill are to income tax provisions.
- Exempting all sales or exchanges of cattle, horses, and livestock from the income tax.
- Exempting the sale of a family owned business to another family member
- Providing a deduction against the income tax for contributions to a nonprofit organization.
- Providing a deduction against the income tax for donations to a nonprofit organization engaged in services for individuals with disabilities.
- Ensuring the income tax, as it pertains to tangible personal property, only applies to such property located in Washington during the taxable year.
- Removing a provision requiring taxpayers file their federal income tax returns with the Department of Revenue.
- Providing sales and use tax exemptions for clothing and prepared food.
- Specifying that the state income tax authorized cannot be construed in any way as providing authorization for cities or counties to impose a local version of the tax.
- Prohibiting the Attorney General from requesting the Supreme Court to reconsider its prior rulings declaring income to be property
- Delaying the effective date of the act until July 1, 2025, to allow the Legislature to review recommendations from the Tax Structure Work Group before imposing a state tax on income.
- Implementing a Referendum Clause, with Statement outlining Voters' 10 prior Rejections of Income
- Title Amendment – Striking the title "An act relating to investing in Washington families and creating a more progressive tax system in Washington by enacting an excise tax on the sale or exchange of certain capital assets" and replace it with "An act relating to enacting a capital gains income tax"
There is a silver lining to this very bad piece of legislation – the one amendment that was accepted removes the emergency clause and removes language from the intent section specifying that the tax is necessary to fund state government. This means that if this bill passes the legislature and the governor signs it into law, signatures can be collected, and this bill could come before you in the form of a referendum.
Watch my floor speech below on final passage.
What happens next? This bill is now headed to the House of Representatives for consideration. For those interested, you can go to leg.wa.gov and sign up to testify on this bill when it comes before the House Appropriations Committee.
Thank you for allowing me to be your voice in Olympia.
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 Floor speech on final passage of Senate Bill 5096
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