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A Taxing Situation Here in Washington State

Brett Davis

Posted on May 5, 2021 21:14

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Lawmakers and the governor ignore the state constitution, state Supreme Court rulings, and plain English in passing a capital gains income tax.

Consider the self-evident meaning of Article VII, Section 1 of the Washington State Constitution: “All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax and shall be levied and collected for public purposes only. The word ‘property’ as used herein shall mean and include everything, whether tangible or intangible, subject to ownership.”

Consider further the Washington State Supreme Court has long held that income is property. In fact, a 1960 decision by the high court basically says not to ask the court to reverse its numerous rulings prohibiting a graduated income tax, recommending instead amending the state constitution to achieve said tax.

Consider further still that the Internal Revenue Service and departments of revenue in every other state in the union recognize capital gains as income.

Now try to square all of that with the fact Gov. Jay Inslee on Tuesday (May 4) signed into law a bill approved on the last day of this year’s legislative session that imposes a 7 percent tax on capital gains above $250,000 for individuals and joint filers from the sale of assets such as stocks and bonds.

Supporters of the passage of this new tax — already set to be challenged in court — defend it via a feat of linguistic legerdemain and a degree of shamelessness that is something to behold, even in the truth-averse world of politics.

The Legislature passed the capital gains tax via the Orwellian gaslighting tactic of calling something what it is not. In short, lawmakers identified it as an excise tax solely for the purpose of getting around the state constitution’s income tax prohibition.

Sane people recognize this abuse of language does not change reality. It does not follow that the distinction between an excise tax and an income tax is the product of political fantasy, or that an excise tax and an income tax would cease to be different if only politicians stopped labeling them differently.

Unfortunately, sanity is in short supply in Olympia, whereas fantastical thinking at the expense of citizens reigns supreme. Politicians no longer hide their disdain for the people as the sovereign in Washington state, what with the capital gains income tax legislation including an emergency clause to deny the people’s right of referendum.

Furthermore, public records show lawmakers plan to use the capital gains income tax to set up a lawsuit to try imposing a broad-based graduated income tax.

Proponents of the nascent tax frame the issue as one of fairness, but that rings hollow in light of the dishonest way politicians went about passing the legislation, not to mention state coffers are — in spite of government-mandated shutdowns due to the pandemic — overflowing

If progressive income tax backers truly had the courage of their convictions, they would be openly trying to amend the state constitution as such.

Brett Davis

Posted on May 5, 2021 21:14

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