Have you heard? Washington state no longer has the worst tax code in the U.S., according to new data from the Institute on Taxation and Economic Policy. Thanks to key policies passed in 2021—the capital gains tax and the Working Families Tax Credit—our state tax code moved up one place in the national rankings.
While this may not seem like a lot to celebrate, we spent decades as the state with the least equitable tax code in the nation. It is proof that we can make progress in how our tax code is structured and how we fund our public services. Most importantly, we can make a difference in the lives of thousands of children, students, and families.
Unfortunately, that progress is in jeopardy from Initiative 2109, a proposal from hedge fund mega-millionaire Brian Heywood, who doesn’t want to pay what he owes in taxes. This is the latest in his many and expensive attempts to give the super-rich a tax cut and keep the rules rigged in his favor. First, he failed in the Legislature, then he failed to qualify for the ballot in 2022, next he lost in the Washington Supreme Court in 2023, and finally the U.S. Supreme Court turned down his request to hear the case at the end of 2023. Along the way, he’s broken some rules; Heywood and his campaign are currently under investigation by the PDC for misreporting campaign funds.
If passed in November, I-2109 would slash over $5 billion from our schools, early learning, and childcare to give a tax cut to the very wealthiest.
Intervenor Mary Curry of Tacoma, childcare provider / Courtesy of Invest in WA Now
The capital gains tax, passed in 2021, is a modest 7% tax on windfall profits of over $250,000 from the sale of stocks, bonds, and other assets. Just 0.2% of Washingtonians—under 4000 people—paid the tax in 2022.
In its first year, the capital gains tax brought in almost $900 million for the Education Legacy Trust Account, which supports childcare, pre-schools, special education, and community and technical colleges; it also funds the Common School Construction Account, which helps with renovating, repairing, and building schools.
We will not allow a mega-millionaire to grab this money from Washington’s kids just to enrich his wealthy friends. Washington voters are with us. Poll after poll shows the capital gains tax is overwhelmingly popular because Washingtonians want the super-rich to pay what they owe our communities.
In addition to helping parents afford childcare, kids get prepared for kindergarten, and students get the support they need in public schools. The capital gains tax is an important step in fixing our upside-down tax code and asking the wealthy to pay what they truly owe in taxes.
Low-income communities and Black and brown people have been paying more than their share in taxes for far too long. Meanwhile, the wealthiest people in our state are getting away with paying far less than they truly owe. Policies like the capital gains tax are making our tax code more equitable and bringing in more revenue to make sure all our communities have what they need to thrive.
I hope you will stand with Invest in Washington Now and our partners as we defend the capital gains tax again. We have won in the courts, and we feel confident we will win again with voters.
Treasure Mackley is the Executive Director of Invest in Washington Now, an organization that advocates for a more fair and just tax code in Washington State.
Treasure Mackley is the Executive Director of Invest in Washington Now, an organization that advocates for a more fair and just tax code in Washington State.
