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Advisory vote on Washington's capital gains tax failing in initial returns

The tax 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.

OLYMPIA, Wash. — An advisory vote on Washington state's new capital gains tax on high-profit assets was failing after an initial round of election results were released Nov. 2.

Advisory Vote 37 is meant to gauge public opinion.

About 63% of voters say the measure should be repealed, and 37% say it should be maintained.

The Washington state Legislature imposed the tax, without voter approval, earlier this year. Gov. Jay Inslee signed the tax into law in May 2021.

RELATED: Washington state 2021 general election results

It 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 tax took effect July 25. However, taxes will not be imposed until Jan. 1, 2022. It's expected to bring in $415 million in 2023, the first year the state would see money from the tax.

The tax includes exemptions for all real estate, retirement accounts, livestock, agricultural land, fishing privileges, family-owned small businesses, and more. It is estimated to affect about 7,000 of the state's wealthiest taxpayers, generating $5.7 billion in its first ten years.

Revenues collected from the tax would be deposited in the Education Legacy Trust and Common School Construction Account. The money will be used to fund investments in K-12 education, child care and early learning.

However, advisory votes are non-binding and won't actually change the law, according to the Secretary of State's Office. It also won't change how taxes are collected.

Support for the tax has been split among lawmakers and businesses. Some say the tax is necessary so the wealthiest can "pay their fair share." Others say the tax is unconstitutional, because it's labeled an excise tax – which are typically taxes on privileges like owning a business or transactions on gas, cigarettes or alcohol – instead of an income tax.