Despite new majority, state Democrats won’t scramble for a capital gains tax | 2018 Legislative Session

OLYMPIA — While Democrats in the state Legislature have supported enacting a capital gains tax to fund public education in the past, they aren’t itching to pass one this legislative session now that they control both the statehouse and the governorship.

At a news conference late last week, Senate Majority Leader Sharon Nelson, D–Maury Island, said that while “everything will be on the table,” she doesn’t see much momentum behind passing a capital gains tax assessed on profits derived from the sale of property or other assets this session due to time constraints and concerns about the concept amongst her caucus.

“There a few members who have serious concerns about the volatility of a capital gains tax,” Nelson said, adding that the upcoming session’s short length of 60 days makes a push for the tax less likely.

“Our goal is to get out on time; and time is going to fly by,” she said.

Other Democrats are more definitive.

“I don’t think anyone is looking at anything unrealistic relative to timing in a 60-day session,” said Sen. Reuven Carlyle, D–Seattle, a past proponent of the capital gains tax. “That’s just a heavy lift.”

Democrats won back control of the state Senate in November with Democrat Manka Dhingra’s electoral victory in the 45th Legislative District covering Kirkland and Woodinville. They now control the House, Senate and governorship.

In 2015, in order to meet the 2012 McCleary state Supreme Court mandate that the legislature fully fund public education, House Democrats proposed a capital gains tax to help fund K-12 education before taking the plan off the table.

In late 2016, Governor Jay Inslee pushed a capital gains tax for the same purpose, before compromising to pass a budget last summer which will add roughly $7 billion to education over four years through hiked property taxes.

However, the court ruled last November that the Legislature needs to come up with an additional $1 billion to meet their mandate, prompting questions on where the Legislature is going to find the money in the upcoming session.

State Republicans have been largely opposed to past proposals from Democrats to enact a capital gains tax, a stance which hasn’t seemed to change.

“I don’t see any support for a capital gains tax in my caucus because it is an income tax,” Senate Minority Leader Mark Schoesler, R–Ritzville, said at last Thursday’s conference.

Similarly, Representative David Taylor (R–Moxee) said that House Republicans are opposed to new taxes to fund education.

Last month, Gov. Inslee proposed a tax on carbon emissions — the specifics of this plan will be announced Tuesday — to help cover the shortfall.

However, Sen. Nelson played down both the carbon tax along with any discussion of a capital gains tax.

“We’ll be taking a look at the carbon [tax] and certainly talking about capital gains. In a 60-day session, I’m not sure we’re going to move forward on either,” she said.

Josh Kelety is a reporter with the WNPA Olympia News Bureau.

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