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capital gains tax constitutional

Photo courtesy Washington Courts

Supreme Court: capital gains tax constitutional

Tax will support Washington's Fair Start for Kids Act

A state capital gains tax approved by the Washington Legislature in 2021 was given the go-ahead by the Washington Supreme Court on March 24 when the court ruled the tax is constitutional. Seven justices supported the ruling, two opposed. 

The tax will collect $500 million in funding for the Fair Start for Kids Act and will boost the coffers of state-funded kindergarten readiness and child care programs including the Early Childhood Education And Assistance Program (ECEAP) and Head Start. 

It is also a big win in the effort to change the regressive tax system in Washington, a state in which the wealthy pay a lower share of taxes than lower-income earners. Approximately 0.2% of Washingtonian taxpayers will see enough profits to pay the tax. 

“The capital gains tax is an important step in making our tax code more fair and just,” said Dr. Stephan Blanford, executive director of the statewide Children’s Alliance, before the decision came down. “With it, we can begin to undo decades of historic and current racism and disinvestment that have hurt families, communities, and small businesses. Study after study has shown how racist policies impact the financial well-being of Black and brown people, and our tax code can help us reverse these consequences.”

Invest in Washington Now, a group of parents, teachers and others advocating for a progressive state tax system called the court decision “a huge victory for young kids, parents, and schools.”

“The Supreme Court’s decision means that the wealthiest Washingtonians will finally start to pay more of what they truly owe in taxes  and that we can begin to undo decades of racism and disinvestment,” said Mackley after the decision came down. “As a parent, I’m thrilled because this decision secures $500 million every year in funding for early learning, child care, and public schools. It will mean more options for parents looking for safe, affordable care for their children and more reliable employees for business owners whose staff need child care in order to work.

Mackley added: “This is especially important in rural communities, where lack access to local child care has held back kids, parents and businesses. The ruling also means more resources for students and their teachers as well as new jobs in school construction.”

Invest in Washington Now shared the following video as a way of helping parents understand what they will — and won’t — be paying as the capital gains tax moves into collection:

Capital gains tax constitutional

CLICK HERE TO VIEW as Washington Education Association’s Larry Delaney explains how the capital gains tax works.

Maya Ewings, a Tacoma mom, and an ECEAP family support worker pointed out in a recent Seattle’s Child opinion piece that capital gains tax will help the state provide additional subsidized daycare spots to families in need, increase kindergarten readiness, and support the state’s Education Legacy Fund. Created in 2005, the fund supports K-12 schools and expands access to higher education through funding for new enrollments, financial aid, and other educational improvement efforts. 

“More affordable options for childcare won’t just benefit parents,” Ewings wrote. “Employers will have access to a bigger and more stable pool of workers. Educators will welcome kindergarten-ready learners with a solid foundation of social, emotional, and early learning skills.”

“No matter what you look like or what zip code you live in, the ruling on the capital gains tax will mean that it will be a bit easier to build a good life for your family,” Mackley said. “And it’s because we’re finally insisting that the super-rich contribute what they owe, just like the rest of us.”

The 7% tax is not an income tax. Instead, it applies to profits made from the sale of stocks and certain capital assets that exceed $250,000. It does not apply to real estate, retirement accounts like IRAs, family-owned small businesses, and farms, among other things.

More at Seattle’s Child:

“Why Washington needs a capital gains tax”

About the Author

Cheryl Murfin

Cheryl Murfin is managing editor at Seattle's Child. She is also a certified doula, lactation educator for and a certified AWA writing workshop facilitator at