A thumbs up for capital gains, kind words for the Senate budget

It’s Day 75. Here’s what’s happening in the 2023 session of the Washington Legislature

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2023 Washington Legislature, Day 75 of 105

Everett Herald political reporter Jerry Cornfield: jcornfield@heraldnet.com | @dospueblos

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OLYMPIA, March 24, 2023 — It’s Friday. Today got off to a bang with the state Supreme Court affirming the legality of the capital gains tax.

The 7-2 ruling overturns the March 2022 decision by a Douglas County Superior Court judge that said it was an unconstitutional tax on income.

“The capital gains tax is appropriately characterized as an excise because it is levied on the sale or exchange of capital assets, not on capital assets or gains themselves,” Justice Debra Stephens wrote for the majority. “The capital gains tax is a valid excise tax under Washington law.”

Perfect timing. Initial payments from the tax are due next month. Senate and House budget writers are booking the money — $500 million a year — for early learning, child care and more. Gov. Jay Inslee did too in the spending plan he put out in December.

Big win for Inslee — who signed the tax into law in 2021 — and the left flank of his Democratic Party which bemoans the state’s tax system in which the less wealthy residents pay a greater share of their income in taxes than the most wealthy. This one is expected to raise a half-billion dollars a year from roughly 7,000 taxpayers.

Inslee called it a “historic victory” in the fight to make the system fairer. Personally gratifying as well. He had pushed for such a tax from the time he got sworn in as governor in 2013. Hard to be humble “when you have an enormous success,” he told reporters.

Republicans aren’t celebrating. They liked the lower court ruling. They’re glad the Supreme Court didn’t go so far as to clear a path for a graduated income tax. But they’re worried the capital gains tax may get expanded, one tweak at a time.

“Taxpayers clearly need to be on their guard – we should expect the Democrats to start adjusting the parameters of this tax so it applies to more and more people over time, which means more and more of their money going to government,” Sen. Lynda Wilson, R-Vancouver, the lead budget writer for Senate Republicans, said in a statement.

A political rarity

Shortly after Senate Democrats unveiled their proposed operating budget Thursday, Republicans responded in a way that caught my attention.

They liked it. Not all of it. Enough to warrant polite applause, not partisan derision.

Senate Minority Leader John Braun issued a release proclaiming “Bipartisan Senate budget addresses equity issue of our time.” He applauded a sizable boost in funding for special education and a separate sum for addressing students’ learning loss.

Wilson and Republican Sen. Chris Gildon, the top budget writers in the GOP caucus, put out their own release under the headline, “Republican leaders encouraged by ‘inclusive’ Senate operating budget proposal.” They appreciated getting invited to the table where budget conversations occurred, and having their voices heard.

There seemed to be lots of good will in the crafting of the Senate capital budget as well. Expect a bipartisan vote when it comes up on the Senate floor. That was expected sometime today.

On the clock

March 29 is the next cut-off. Policy bills not tied to the budget must be passed out of a committee to remain in play.

Assault weapons ban, vehicle pursuit, Blake decision response and designating January as the month to honor Americans of Chinese descent are scheduled for action in executive session early next week.

On Friday, a bill naming Suciasaurus rex as the state dinosaur advanced.

Enjoy the weekend.

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