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Opinion: What the new capital-gains tax means for Washington families

Washington's tax structure has been unfair for too long. This is a step in the right direction.

Earlier this year, after 10 years of working toward it, the Legislature finally made good on a promise to begin to balance our upside-down tax code.

As advocates for equity, we know that for too long, Washington’s tax system has meant that the poorer you are, the more of your income you pay in state and local taxes, while the very wealthy get away with paying less than their share.

That’s why we joined with people and organizations across the state — from educators and women’s health advocates to those working for housing justice, immigrants and farm workers to tech professionals — to find a better balance and more equity in our tax code. Together, we fought for passage of a capital-gains tax, a modest tax that people will pay when they make huge profits in the stock market, the unearned income realized mostly by the affluent in our state.

Capital gains: Who pays?

So what is this tax and what does it mean for you and your family?

The new state capital-gains tax will be paid by less than 1% of our state’s wealthiest residents. And the revenue it brings in will be transformative for millions of Washingtonians. We expect to make a $500 million a year contribution to the Education Legacy Trust Fund, a fund that supports education from pre-K through job re-training. No family in our state will be untouched by this historic investment. A 5-year-old in Walla Walla can attend preschool. A middle-schooler in Vancouver will be ready to take on calculus in high school. And someone who’s never considered college can apply for scholarships so that it’s finally within reach.

Our tax code isn’t right-side up yet. Working families are still paying up to 17% in state and local taxes while those with the highest incomes pay just 3%, even after capital-gains tax law goes into effect. We still have work to do.

It’s not fair or ethical to continue to ask mom and pop businesses, immigrants and people of color to carry the structural burden of our state budget. That’s why gains from the sale of retirement accounts, small businesses and family farms, livestock, real estate and other assets are exempt from the capital-gains tax.

The way we can make a difference for most Washingtonians is to make sure they see relief on their tax bill. We must continue to build equity in our tax code so that working families, elders, Black and brown people who have been carrying more than their share start to feel the difference at the grocery store, in their paychecks, and on their property-tax bills.

More work lies ahead

In Olympia, most state lawmakers understand that we can’t solve problems without resources. Our state has plenty, but we need the courage to collect them and center equity in how they are spent. During the next legislative session, we’ll be continuing to look for ways so that those with the lowest incomes feel less impact when it comes to taxes. A wealth tax on billionaires, a more equitable inheritance tax, property tax exemptions, and other sources of progressive revenue would continue to balance our upside-down tax code and move Washington out of last place when it comes to tax fairness.

Here in Washington, no matter what we look like or where we come from, most of us work hard for our families and communities. But some anti-tax extremists try to divide and distract us, pitting communities against each other and making us think there isn’t enough to go around and we can’t have what we need.

When we join together we can rewrite the rules — and the tax code — so that everyone who does well in Washington does right by Washington. We started by passing a capital-gains tax and can’t stop till our tax code is fair and just for everyone.

 

The first American-born child of immigrant parents from Central America, Sharonne Navas is the co-founder and executive director of the Equity in Education Coalition, an organization that is working to eliminate the opportunity gap for all children of color in Washington state.

After 20 years of building powerful movements for change, Kirsten Harris-Talley now serves the 37th District in the state House of Representatives, where she is committed to bringing community power to the state level to solve the biggest issues in her district. 

 

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About the Author

Sharonne Navas and Kirsten Harris-Talley