The capital gains tax goes to education and child care. What happens if voters repeal it?

Plus some big checks in the cap gains tax campaign and a new wrinkle on Ferguson's surplus money

Initiative 2109 would repeal the capital gains tax passed by lawmakers in 2021 which generated a new source of state revenue for K-12 education and helped pay for the expansion of state-subsidized early learning and child care programs. 

If voters pass I-2109, the state would lose about $2.2 billion from capital gains tax revenue over five years. This comes out to an estimated $400 million annual loss, according to a financial impact statement from the Office of Financial Management. 

Recent polling by Cascade PBS suggests voters are not convinced eliminating the capital gains tax, which hits the earnings of less than 1% of Washingtonians, is the best move. More than half of survey respondents would vote “no” on the initiative—preserving the 7% tax on the sale of long-term capital gains valued above $250K—and about 30% would repeal the tax. 

In an I-2109 video voter’s guide, initiative opponents argued repealing the tax would cleave a vital revenue stream the state uses to pay for K-12 education, higher education, early learning, and child care programs. Initiative supporters argued the capital gains tax could set a precedent for more taxation and could discourage entrepreneurship in the state. 

Photo by Matiinu Ramadhan on Unsplash