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The Opportunity for All Coalition filed a lawsuit today to overturn the new income tax on capital gains (SB 5096). This is the second lawsuit to be filed against the tax. The plaintiffs are April Clayton (Red Apple Orchards), Kevin and Renee Bouchey (former owners S.K.D. Farms, Inc), Joanna Cable, Matthew Sonderen (Sonderen Packaging), Rosella and Burr Mosby (Mosby Farms), Christopher and Catherine Senske (Senske Services), and Washington State Farm Bureau. All of the plaintiffs are Washington Policy Center members. It is no surprise to see so...
Public records show lawmakers plan to use the capital gains income tax to set up a lawsuit to try to impose a broad-based graduated income tax. They’re going to get not one but two lawsuits from citizens fighting the unconstitutional income tax. It could be years, however, before we know if the state Supreme Court decides to uphold its numerous rulings saying that you own your income or if they’ll instead reverse course and take the bait from income tax supporters. Just days after the legislature adopted SB 5096 (income tax on capital gai...
Truly unbelievable. A Senate floor vote to impose an income tax has occurred before the March 17 Revenue Forecast and budget release. The state Senate has taken the first step towards imposing an income tax with a 25-24 Saturday vote on SB 5096 (income tax on capital gains). The House is expected to quickly approve the bill and send it to the Governor. The emergency clause was removed, however, meaning lawyers will have time to perfect their legal briefs with the expected court action taking a detour this fall for a referendum vote. Despite...
OLYMPIA–Truly unbelievable. A Senate floor vote to impose an income tax has occurred before the March 17 Revenue Forecast and budget release. The state Senate has taken the first step towards imposing an income tax with a 25-24 Saturday vote on SB 5096 (income tax on capital gains). The House is expected to quickly approve the bill and send it to the Governor. The emergency clause was removed, however, meaning lawyers will have time to perfect their legal briefs with the expected court action taking a detour this fall for a referendum vote. D...
I’m at a total loss. How can very smart lawmakers look at a letter from the IRS unequivocally calling a capital gains tax an income tax, see that every state revenue director in the country describes a capital gains tax as an income tax, realize that the nine states without a personal income tax don’t tax capital gains, and yet continue to insist a capital gains tax is an excise tax? Perhaps it’s because they are confused about the differences between a capital gains tax and a financial transaction tax. There is not a single state in the countr...
OLYMPIA–Against the backdrop of now three separate income tax on capital gains proposals (HB 1496, SB 5096 and SB 5204) comes the question: What impact do these tax proposals have on the state’s competitiveness? We’ve previously documented the Washington Department of Commerce saying no personal or corporate income tax is a competitive advantage for the state. Now comes an interesting interview with one of WA’s newest CEOs to move from California–Tanium’s Orion Hindawi. Hindawi had many thoughtful things to say during a February 4, 2021 event s...
OLYMPIA–The life of a bill is truly a mysterious thing. For example, let’s follow the journey of two different bipartisan sponsored bills: HB 1067 (state dinosaur) and HB 1020 (emergency powers reform). Both bills were pre-filed before session started. Both bills were referred to the same committee. Only one of these bills, however, has been scheduled for a public hearing and executive action. Based on the experience of Washingtonians over the past year, can you guess which one? That’s right, the winner for the committee’s time is declari...
Despite the budget being balanced, billions in reserve, and projected revenue growth of 7.2% the Governor is yet again proposing an income tax on capital gains in his new budget. Here are the details on his proposed 9% capital gains income tax. The Governor, however, claims that this type of tax isn’t an income tax. What does he know that the IRS and every other state across the country doesn’t? IRS: “You ask whether tax on capital gains is considered an excise tax or an income tax? It is an income tax. More specifically, capital gains are trea...
For years Washington's Department of Commerce has highlighted the state not having an income tax as being a competitive advantage for employers. Surprisingly, Commerce recently updated its "Choose Washington" website to remove the reference about the state not having an income tax on its "Pro-Business" webpage. Commerce's sudden removal is contrary to years of statements acknowledging that no income tax was a powerful inducement to locate business in the state. When testifying on SB 5096 (9%...
The Senate Ways & Means Committee will hold a public hearing on January 14 at 4 p.m. on the Governor’s proposed income tax on capitals gains (SB 5096). Remote testimony is available and it is super easy to sign up for (I’ve already registered). The bill defines “Federal net long-term capital gain” as “the net long-term capital gain reportable for federal income tax purposes…” Senate Bill 5096 also says “taxpayers owing tax under this chapter must file, on forms prescribed by the department, a return with the department on or before the date...
Despite the budget being balanced, billions in reserve, and projected revenue growth of 7.2% the Governor is yet again proposing an income tax on capital gains in his new budget. Here are the details on his proposed 9% capital gains income tax. The Governor, however, claims that this type of tax isn’t an income tax. What does he know that the IRS and every other state across the country doesn’t? IRS: “You ask whether tax on capital gains is considered an excise tax or an income tax? It is an income tax. More specifically, capital gains are trea...
Despite the fact state revenues are forecasted to increase 10.7% during this biennia and 7.2% for 2021-23 (showing continued growth every year), a draft bill to impose a statewide "employer compensation tax" is circulating for the 2021 session. The intent of the draft bill is unclear with this current placeholder text: "TBD." According to the draft bill: "Beginning January 1, 2022, an employer compensation tax is imposed on employers engaging in business. The tax imposed by this chapter is levie...
It is official. Boeing will consolidate its 787 manufacturing in South Carolina. This news has many implications for the state including a direct impact on the state’s budget outlook. Although the September revenue forecast didn’t make an assumption about what Boeing would decide, a downside risk to the forecast was if South Carolina was picked. From the September revenue forecast: “The potential consolidation of Boeing 787 production in South Carolina and resulting decline in Washington aerospace employment is also a major concern.” Respond...
OLYMPIA–First the good news. Unlike during the great recession, state revenue is still increasing overall during the COVID pandemic. According to the September revenue forecast: “Forecasted Near GF-S revenue for the 2019-21 biennium is now $50.022 billion, 8.6% higher than 2017-19 biennial revenue, and forecasted Near GF-S revenue for the 2021-23 biennium is $53.737 billion, an increase of 7.4% over expected 2019-21 biennial revenue.” The bad news of course, this revenue growth is less than what lawmakers assumed when adopting the 2020 suppl...
Members of the forgotten branch of government during the COVID pandemic, the legislative branch, continue to make their voices heard concerning the need for a special session. Sen. John Braun, ranking member on the Senate Ways and Means Committee, sent this letter on July 13 to his fellow lawmakers: “I write to you deeply concerned that we are ceding our role too easily to the executive branch. The state constitution explicitly endows our branch with the legislative authority. It is we who have the power to make laws and spend funds. It is a p...
With the state’s budget outlook in the news, discussion of a capital gains tax is occurring with greater frequency. There is one piece of information that is consistently left out, however: the fact that a capital gains tax is an income tax. This important detail dramatically changes the political and legal framework for the debate. On the political side is the fact the voters have rejected 10 straight income tax proposals, including 6 proposed constitutional amendments. On the legal side is the fact a graduated income tax would require a const...
OLYMPIA–Washington’s economic outlook has dramatically changed due to the global COVID pandemic and Governor Inslee’s subsequent order in March to lock-down the state economy. When the 2020 legislative session opened in January, the state was in the midst of strong economic growth leading to the opportunity for tax relief. Instead, lawmakers used that tax growth to increase the state budget even higher. Then the global COVID pandemic turned the state’s financial outlook upside down. Washington’s current 2019-21 budget is $53.3 billion....
OLYMPIA–Governor Inslee made his appointment this week to the fill the vacancy created on the state Supreme Court by the retirement of Chief Justice Fairhurst. Although his selection of Whatcom County Superior Court Judge Raquel Montoya-Lewis was a historic first, many on the east side of the state had hoped the Governor would appoint one of the highly qualified applicants from Eastern Washington. Among those calling for more geographic diversity on the state Supreme Court is the Chair of the Franklin County Democratic Party. Jeffrey R...
OLYMPIA–A new lawsuit has the potential to eliminate one of the Legislature’s most egregious anti-transparent games: Title Only bills. On November 5, the Washington Bankers Association challenged the adoption of HB 2167 (Title Only bill bank tax increase). The Bankers are represented by former Attorney General Rob McKenna. As of the last ballot count, 55% of Washington votes are recommending the legislature repeal this Title Only bill bank tax. According to the lawsuit: “Plaintiffs seek a declaratory judgment that SHB 2167 is unlawful and i...
By now you’ve probably heard that the City of Olympia is facing a PDC complaint for illegally using tax dollars to campaign against I-976. Yesterday Olympia responded saying this about its 15,000 household, $7,423 taxpayer funded mailer: “Although minds may differ, the City of Olympia believes that its mailer’s statement to ‘Vote No on l-976’ is a fair conclusion based on objective facts, keeping with the Olympia City Council’s resolution following a properly noticed public hearing.” State law (RCW 42.17A.555), however, says (in-part): “No elec...
With Halloween just over a week away, perhaps it’s fitting that some states hope to cash in from the Grim Reaper via their death taxes. Sadly, Washington is among the few states still counting on death to fund certain programs. For example, the Tax Foundation recently reported that Washington has the highest death tax (estate) rate in the country. Perhaps more importantly, Washington is the only state without an income tax that imposes a death tax. As noted by a study released today, this could cause competitive challenges from our fellow n...
WASHINGTON STATE–Although state revenues were already projected to increase by nearly $5 billion, lawmakers last session raised taxes by more than $1 billion. We now know, thanks to the Department of Revenue’s (DOR) supplemental budget request, that it takes a village to collect a tax increase of this size. As reported by Jerry Cornfield: “The Department of Revenue says it needs 44 more people–17 now and another 27 in the next fiscal year–to handle added responsibilities created by 32 revenue bills signed into law earlier this year. Agency le...