The Seattle Times editorial board has long supported spending more money on K-12, higher education, and other essentially services, it just never wanted to raise the taxes necessary to pay for it. Until now:
If some new revenue is needed — and that appears to be the case — the Legislature should vet a capital-gains tax proposal offered by the House Democrats. It is more conservative than Gov. Jay Inslee’s proposal, hitting relatively few wealthy households, while accounting for the volatility of capital gains with a dedicated fund that would fill in go-go years and could be drawn down in slowdowns.
Whether the Legislature is capable of such fiscal restraint — and not spending every dime, every year — is an open question. A serious proposal would lock revenues in a rainy-day fund, accessible only with supermajority. The Legislature also needs to weigh the potential to chase away startups seeking to launch in a state without an income tax. But the capital-gains tax is a provocative idea, and could ease a regressive tax code that favors Seattle’s accumulating tech wealth.
Of course, this capital gains tax proposal neither raises enough money to fill our K-12 funding shortfall, nor makes anything but a small correction in this, our nation’s most regressive tax structure. But it’s a modest step in the right direction, and a hopeful sign that our state’s paper of record may be willing to have a grown up conversation about taxes.
We’ll see if the State Senate is ready to talk about that too. Our state should put a freeze on the sales tax. Time to come up with some new ideas.
“The Legislature also needs to weigh the potential to chase away startups seeking to launch in a state without an income tax.”
Never mind that our regressive B&O tax chases away new businesses and drives out old ones. It would be hard to enact ANY tax as regressive as the ones we already have.
Our tax system needs a funeral and burial not a patch job with a bandaid or two.
Where would these startups go anyway? Almost every other state taxes capital gains, and at rates either equal to or higher then this rate.
California’s tax rate on capital gains is around 2x this proposed rate and that hasn’t seemed to kill their startup economy.