Washington state’s new capital gains income tax is the subject of an ongoing lawsuit and hasn’t been collected yet, but two Democratic senators have introduced legislation to double the tax for some.
Senate Bill 5926, sponsored by state Sens. June Robinson and Joe Nguyen, would “tax an individual’s Washington capital gains derived primarily as compensation for investment management services” at a rate of 14 percent.
The current capital gains income tax levies a 7% duty on capital gains above $250,000 for individuals and joint filers from the sale of assets such as stocks and bonds. Exceptions include the sale of real estate, livestock, and small family-owned businesses.
The capital gains income tax is currently embroiled in legal action over the question of whether it’s an excise tax or an income tax. And if the latter, whether income is property as defined by the state constitution and subject to its uniformity clause.
The Washington State Supreme Court is widely expected to ultimately determine the constitutionality of the tax.
Hugh Spitzer, professor at the University of Washington School of Law, told The Center Square any such decision by the state’s highest court will hinge on the definition of the word “excise.”
A summary judgement hearing in the capital gains income tax lawsuit is set for Feb. 4
SB 5926 had its first reading on Friday.
