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Accelerate Washington’s Economy, Tax Capital Gains

Posted by michaelm at Feb 23, 2012 04:50 PM |

Capital gains, the profits from the sale of stocks, bonds, and other capital assets, recover rapidly after an economic recession. As we’ve noted in other blog posts, enacting a state excise tax on capital gains would help our state recover much more quickly following tough economic times.

Since hitting a recession low in March 2009, the Dow Jones Industrial Average, a measure used to indicate overall stock market performance, has doubled. Yet, while wealthy individuals who own stakes in hedge funds, mutual funds and other high-end investment partnerships have seen this source of wealth recover and even grow, other aspects of the economy have not fared nearly as well.

Unlike other parts of the economy, capital gains are extremely resilient following an economic downturn. The graph below compares the growth rates of four key economic indicators following the official end of the Great Recession.  Since June of 2009, the stock market has grown by 54 percent, easily outperforming the growth of consumer spending (11 percent), employment (1.1 percent), and wages and salaries (6.8 percent).

Growth of Key Economic Indicators

Notably, had a capital gains tax been in place prior to the great recession, our state’s resources would be recovering much more quickly relative to current projections, and would be poised to grow even more rapidly in the coming years as the recovery gains momentum.

Our current revenue system is inadequate for maintaining the crucial funding needed for the education, health care and public safety services all Washington residents rely on. Taxing capital gains would provide the state a fast growing and resilient revenue source that would help maintain future investments in these critical public structures.

For more information on taxing capital gains, read our policy brief A Capital Reform: Using capital gains to fuel job creation and economic prosperity in Washington state.

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Budget Matters 2017 Save the Date


Save the Date!

We will host two Budget Matters policy summits this year – one in Spokane on October 31 and one in Seattle on December 6! The Spokane summit, featuring Jared Bernstein of the Center on Budget and Policy Priorities, will focus on the impact of federal and state policy decisions on eastern Washington communities. The Seattle summit, featuring Glenn Harris of Race Forward, will examine what it would take to lift up everyone to advance progress in our state. More details coming soon!

Our Policy Priorities

Washington state should be a place where all our residents have strong communities, great schools, and the chance for a bright future. Our 2017-2019 Legislative Agenda outlines the priorities we are working to advance to build a better Washington.

Budget Beat!

Check out the Budget Beat webinars we hosted throughout the 2017 legislative session, including our most recent Budget Beat about federal budget proposals, featuring Louisa Warren of the Center on Budget and Policy Priorities, on our YouTube channel

Testimonies in Olympia

To advance our legislative priorities, the Budget & Policy Center team was in the state capitol throughout session testifying on a wide range of bills. Watch our testimonies on TVW:
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