Initiative 2109 aims to repeal capital gains tax; revenues go to child care, school construction
By Charlotte Alden
A November ballot initiative to repeal the capital gains tax could undercut school and child care funding in Whatcom and Skagit counties.
If passed, Initiative 2109 would repeal the 7% tax on annual capital gains of $262,000 for individuals, as of 2023. This revenue comes from the exchange of stocks, bonds, other investments or tangible assets. It does not apply to real estate sales.
In 2023, the tax generated $786 million in revenue, although the amount could vary widely year-to-year. More than $6 million of revenue from the tax has come to Whatcom County and more than $2.5 million in Skagit County for child care providers and school construction projects. Only 55 people in Whatcom and 37 people in Skagit had to pay taxes on their capital gains in Fiscal Year 2023, according to the Washington State Department of Revenue.
The first $500 million in revenues from the tax are deposited into the state’s Education Legacy Trust Account for schools, access to higher education and child care funding. The remainder is deposited into the Common School Construction Fund for capital investments.
Proponents of the initiative, like the Washington State House Republicans, argue that the capital gains tax is a “major step toward a state income tax” and unnecessary, unpopular and unconstitutional. The Republicans also argued that the tax makes Washington less competitive — “the absence of a capital gain income tax contributed to economic growth in our state — particularly in the technology sector.” The Washington State Supreme Court ruled that the tax was constitutional in March 2023. The tax took effect on Jan. 1, 2022.
The initiative was sponsored by Let’s Go Washington, which is led by Republican State Rep. Jim Walsh and conservative donor Brian Heywood.
Millionaire Heywood is a hedge-fund manager and part-time farmer who spent $6 million to organize and collect 2.6 million signatures for six initiatives. Four of them will appear on the ballot this November:
I-2109 to cancel the state’s 7% capital gains tax
1-2117 to repeal the Climate Commitment Act
I-2066 to repeal parts of a new law to push Puget Sound Energy to transition away from natural gas and
1-2124 to allow people to opt out of the state’s long-term care coverage plan.
Opponents of I-2109 say the tax impacts few people and has an outsized benefit in funding for child care and school construction.
Read the full story in The Cascadia Daily World.
