We are glad to see that the Washington State Supreme Court has allowed revenue officials to move forward on implementing the state’s equitable new tax on capital gains, pending final review by the court in 2023. Although this ruling is not a final decision on the constitutionality of the tax, it allows the state Department of Revenue to move forward necessary administrative work. The rulemaking and implementation process of any new policy is important for getting the details right, and it’s imperative that the state has the ability to thoughtfully move forward with this process.
As we’ve said before, the capital gains tax is a thoughtful, well-designed policy. The concept of a stand-alone excise tax on profits from financial assets just makes sense. It’s a modest tax for a small number of Washingtonians who are already exceptionally wealthy, and it provides a meaningful and needed boost to child care and education funding.
The Washington State Budget & Policy Center has been working on this policy for a decade and has worked with legislative champions, partners, and advocates to improve it over the years based on feedback from supporters, opponents, and everyone in between. The bill that passed in 2021 rightly had strong public support.
There is more to come: The state Supreme Court has scheduled oral arguments on the lawsuit challenging the tax, Quinn v. State of Washington, on January 26, 2023. A final decision is expected later in 2023. The Department of Revenue is also holding a public hearing on proposed rules for implementing the tax at 10 a.m. on December 6, 2022.
Find out more about Washington state’s capital gains wealth tax.