Campaign kicks off to save Washington's capital gains tax

It's been just over two years since Washington's capital gains tax went into effect, and already there's a ballot initiative to repeal it. But a new campaign is pushing back, fighting to preserve the tax.

Opponents of Initiative 2109 gathered in Burien and other cities across the state on Wednesday to officially begin campaigning against the measure. I-2109 will appear on the November ballot and will ask voters if the capital gains tax should stay or be repealed.

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Democratic state Rep. Tana Senn (D–Mercer Island) would like to save it. She said revenue from the tax funds school construction and child-care programs. She argues that just a few Washingtonians are subject to the capital gains tax.

"What we need to really emphasize is that less than 4,000 people in our state pay this tax and maybe a handful in Eastern Washington," Senn said. "These dollars go across our state."

Diana Llanes runs a bilingual childcare center in Burien. At the kick-off event Wednesday morning, she said that repealing the tax could hit the state's child-care industry hard.

"Not only the parents need the child care, but if the funding ends, it will affect the families, and will affect my own business, my small business," Llanes said. "And I won't be able to provide work for my staff."

Under Washington state's capital gains tax, individual profits from the sale of long-term stocks or bonds above $262,000 are taxed at 7%. Real estate sales are not subject to the tax.

Voters will decide on the November 2024 ballot whether to overturn the tax, alongside other conservative-backed initiatives, including one that could dismantle the state's carbon credit market and another that aims to make participation in WA Cares, the state's long-term health care program, optional.

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Advocates seeking to repeal the capital gains tax argue that it could scare wealthy business leaders out of the state. But it's too early to tell if that's happening.

The Washington State Standard reports that in the two years the tax has been active, revenue from the measure has declined. The state raised $786 million from the tax in 2023, its first year. In 2024, it has taken in $433 million. The number of people filing those payments has remained roughly the same over both years.