OLYMPIA, Wash. — The Washington state Legislature approved a bill that would enact a capital gains excise tax to fund the expansion and affordability of childcare, early learning, and public education.
The measure imposes a 7% tax on the sale of stocks, bonds and other high-end assets in excess of $250,000 for both individuals and couples.
The first $250,000 in profit is exempt from annual taxes.
The tax include exemptions for all real estate, retirement accounts, livestock, agricultural land, fishing privileges, family-owned small businesses, and more.
The capital gains excise tax is estimated to affect about 7,000 of the state's wealthiest taxpayers, generating about $500 million per year.
Revenues collected from the tax will be deposited in the Education Legacy Trust and Common School Construction Account. The money will be used to fund investments in K-12 education, childcare and early learning.
The final bill approved by the Legislature adjusts the distribution of collected revenue by capping deposits in the Legacy Trust Account at $500 million while directing additional revenue to the Construction Account.
The bill also includes a charitable donation deduction for taxpayers donating at least $250,000 to nonprofits in that year.
Bill sponsor Sen. June Robinson (D-Everett) said it is an "important step" to rebuilding "our unfair tax code."
“We’ve heard that people from every part of our state are ready to move toward a healthier, stronger future together, and it’s time for the wealthiest among us to pay their fair share for that future," Sen. Robinson said.
The bill heads to Gov. Jay Inslee for his signature.
Following the bill's passage, Inslee said he's "glad" to see the Legislature pass it.
"This bill will help us address our upside down tax system and has been one of my priorities for years," Inslee tweeted. "It's a good day in Washington state."
Once signed into law, the measure passed Sunday will likely face a legal challenge from opponents who say it's a tax on income that violates the state constitution.