OLYMPIA, Wash. (AP) — House Democrats on Friday released their two-year budget plan, that — like the Senate plan released a day earlier — includes a new tax on capital gains and uses a mix of state and federal money to increase spending in areas hit hardest by the pandemic.
The $58 billion House plan spends less than the Senate’s approximately $59 billion proposal, but both plans look to increase spending in areas like education, homelessness and housing and public health and health care.
Democratic House Majority Leader Pat Sullivan said that the past year has highlighted inequalities across the state, especially among communities of color.
“Without bold action we will continue to see this uneven recovery where too many people in our state are left behind,” Sullivan said.
Both plans include the tax on stocks, bonds, and other high-end assets, which has has already passed the Senate and awaits a vote in the House. The measure would impose a 7% tax on the sale of stocks, bonds, and other high-end assets — like a classic car or painting — in excess of $250,000 for both individuals and couples. A person whose business makes more than $10 million per year is also subject to the tax if they make more than $250,000 in selling the business.
Retirement accounts, real estate, farms and forestry would be exempt from the proposed tax.
Opponents of a capital gain tax have argued that it’s a tax on income that’s illegal under state law and litigation is certain if the Legislature ultimately approves the tax.
Republicans have argued that no new taxes are necessary due to the state’s economy outperforming what was initially predicted. In addition to state revenues steadily improving since the coronavirus pandemic shut down the economy last year, lawmakers also have more than $7 billion from the most recent federal stimulus package to use, including $4.2 billion that they need to use by the end of 2024.
The Senate is holding a public hearing on its budget plan on Friday, and the House will hold one on its proposal Saturday. Both chambers are expected to pass their budgets off their respective floors next week and then will move to negotiate a final plan before the 105-day legislative session ends on April 25.
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