Seattle Times Op-Ed: Vote ‘no’ on I-2109, keep WA’s capital gains tax

There’s a lot at stake in Washington’s elections this year. In addition to the presidential race and contests for governor and other state offices, voters will decide on a series of initiatives that will shape the course of our state for decades to come. One of these is Initiative 2109, a measure that cuts billions from education and child care over five years by repealing a capital gains tax on extraordinary profits, a tax paid by less than 1% of Washingtonians.

As parents across Seattle and the region understand all too well, we face dual crises in school funding and child care affordability. Schools from Seattle to Marysville and Bellingham to Belfair are so under-resourced that districts have closed entire buildings, with more on the chopping block. And for parents with young kids, child care costs more than college tuition in Washington. It’s no surprise that 87% of Washington voters want the state to spend more on child care — not less.

In 2021, the Legislature took a step toward addressing these problems with the Fair Start for Kids Act, funded in part by the limited capital gains tax on extraordinary profits. The tax funds thousands of subsidized pre-K and child care spots and has funded over 170 school construction projects across the state so far.

Many people have never heard of the state’s capital gains tax and there’s a reason for that — 99.8% of Washingtonians do not pay it. The tax is collected on profits exceeding $262,000 from the sale of long-term capital assets, such as stocks and bonds. There are exemptions for things like home sales, retirement and college savings accounts, farms and family-owned small businesses. This tax was specifically designed to target only the wealthiest Washingtonians because of the nature of our tax code. The first $500 million per year supports child care and early learning. Any revenue above $500 million per year is used to build new schools across Washington state.

Before the tax’s passage, our state had the most unfair tax code in the nation, with the poorest Washingtonians paying nearly six times as much of their income in state and local taxes as the wealthiest. The capital gains tax has moved us from having the most regressive tax code to the second-most. A major step in the right direction, though clearly we still have a long way to go.

Initiative 2109 would take us backward by giving a tax break to fewer than 4,000 extremely wealthy individuals while cutting billions of dollars in education and child care. Recent polling clearly shows that voters overwhelmingly oppose the measure. But that hasn’t stopped its proponents from running a deceptive campaign.

While many capital gains payers recognize it is time our state’s wealthiest houses paid their fair share in taxes, I-2109’s sponsor is trying to give himself a tax break. Brian Heywood, a wealthy hedge fund manager who moved here from California, spent $6 million of his personal fortune to put the measure on the ballot.

If Heywood’s attempt is successful, it’s not just kids and families who will pay the price, but all of us. The Washington Budget & Policy Center estimates that I-2109 would cost our state over 10,000 jobs and $986 million in GDP every year, sending ripples across our economy.

Middle-class families in Washington have paid what we owe to fund these vital programs. For too long, the very wealthy have gotten away with not doing the same. Voting no on this tax break for ultra-millionaires and billionaires means standing up for the middle class.

We cannot let a mega-millionaire buy a tax break at the expense of our kids and then shift the tax bill to the rest of us. We urge you to vote “no” on Initiative 2109.

Christina Ko is the Washington State manager of Save the Children Action Network.

Stephan Blanford is the executive director of Children’s Alliance, a statewide children's advocacy organization.

Roxana Norouzi is the executive director of OneAmerica, a Washington state immigrant rights nonprofit.

Read the full op-ed in The Seattle Times.