The debate over Gov. Jay Inslee‘s proposed capital gains tax continued along party lines at Thursday’s Associated Press Legislative Preview event.
The tax was debated on a budget panel that included Rep. Ross Hunter (D-Medina), chairman of the House Appropriations Committee; Sen. Andy Hill (R-Redmond) chairman of the Senate Ways and Means Committee; Rep. Bruce Chandler (R-Granger), ranking Republican on the House Appropriations Committee; Sen. Karen Fraser (D-Olympia), member of the Senate Ways and Means Committee.
Inslee last month proposed a $39 billion 2015-17 budget that ends a number of tax breaks, charges carbon polluting companies and raises $800 million over two years through a proposed capital gains tax. The proposed capital gains tax would be 7 percent on money made from the sale of stocks and bonds above $25,000 for individuals and $50,000 for joint filers — which lawmakers say would affect the top 1 percent of earners in Washington state.
Inslee, in his Q&A session, defended his proposal of a capital gains tax, saying it gets the state closer to a system that can get the benefit of people earning more money without also increasing the tax burden on lower-income and middle-income earners.
“If we can tax higher income folks when they get capital gains, and not lower income folks when they buy a pair of shoes, that’s good,” he said.
“Whatever the concerns on the volatility of the capital gains tax, the alternative is zero,” Inslee said.
Hill criticized Inslee’s budget as perpetuating what he called a “deficit myth,” in which the only option was to raise taxes.
He said that because the state’s revenue has risen by more than 4 percent in each of the past two years, the state can continue its existing services and put an additional $1 billion in state education funding over two years.
“When I’m talking with business groups, I ask, ‘Would you like 4 percent growth year over year in this economy,’ ” he said. “I see nods. With some I see a little drool.”
“To say we have a huge budget problem, I think it’s meant to scare people,” Hill said. “The next step is you have to raise taxes.”
Hill also said that a capital gains tax is too unpredictable to be a reliable source of funding for school education, which was one of the requirements under the McCleary ruling. (more…)