Despite new majority, Democrats won’t scramble for a capital gains tax

Nelson: ‘There a few members who have serious concerns about the volatility’

By JOSH KELETY | WNPA Olympia News Bureau

OLYMPIA — In the past, Democrats have supported enacting a capital gains tax to fund public education. While Democrats are in the majority in the Legislature, they aren’t itching to pass a capital gains tax this session.

Senate Majority Leader Sharon Nelson, D-Maury Island, said Jan. 4 that while “everything will be on the table,” she doesn’t see much momentum behind passing a capital gains tax — a tax assessed on profits derived from the sale of property or other assets — because of time constraints and concerns about the concept among members of her caucus.

“There a few members who have serious concerns about the volatility of a capital gains tax,” Nelson said, adding that the 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 control of the state Senate in November with Manka Dhingra’s election in the 45th District (Kirkland and Woodinville). Democrats now control the House, Senate, and governorship.

In 2015, in order to meet the state Supreme Court mandate that the Legislature fully fund public education, House Democrats proposed a capital gains tax to help fund K-12 education but later took the plan off the table. In late 2016, Gov. Jay Inslee pushed a capital gains tax for the same purpose before compromising on a plan to add roughly $7 billion to education over four years through property tax increases.

However, the court ruled in November that the Legislature needs to come up with an additional $1 billion to meet the 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. That stance hasn’t changed. “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 Jan. 4.

Similarly, state Rep. David Taylor, R-Moxee, said House Republicans are opposed to new taxes to fund education.

Last month, Inslee proposed a tax on carbon emissions — the specifics of this plan will be announced Jan. 9 — to help cover the shortfall.

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

— Josh Kelety is a reporter for the WNPA Olympia News Bureau

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