House approves capital gains tax. Bill now moves back to state Senate.

Yesterday the state House of Representatives approved a 7% capital gains tax, adding a provision that appears to mean it will not be subject to a referendum.

Washington House lawmakers Wednesday approved a new tax on capital gains, propelling one of the Democrats’ biggest priorities closer to Gov. Jay Inslee’s signature.

The bill still needs final approval in the Senate by Sunday, the scheduled end of the legislative session, before it can head to Inslee’s desk.

Even as Democrats drag Senate Bill 5096 closer to becoming law, they face questions — and fierce Republican opposition — about language inserted into it that would prevent a statewide referendum this fall

That language makes the bill’s Senate fact a bit uncertain, reports The Seattle Times.

That referendum language could complicate a final vote in the Senate. In that chamber, Democrats last month passed SB 5096 by just a single vote, and only after they removed language in the initial bill to block a referendum.

In a regularly scheduled news conference Wednesday, Senate Democratic Majority Leader Andy Billig of Spokane said the lawmakers in his caucus would have to decide whether they will approve the bill with the language preventing a referendum.

In the Washington Observer, Paul Queary writes

The most obvious reason for an emergency clause is to protect the bill from a referendum challenge on the November ballot. As we reported after the Senate’s action, that’s not likely to actually keep the bill off the ballot because opponents can, and likely will, run an initiative campaign against it. It would be more expensive and difficult to win than a referendum, but thousands of people have hundreds of millions of reasons to try.

But there’s another angle. Without an emergency clause, a bill subjected to the referendum doesn’t take effect until after the election. That’s important here because a law that hasn’t taken effect usually can’t be challenged in court, and judges are typically loath to wade into anything that the voters are scheduled to decide.

Progressives are transparently hungry for this particular court fight, under the theory that today’s state supreme court justices, all appointed by Democratic governors and/or elected statewide in a heavily Democratic state2, would rule differently than the 1932 court that found income was property, and therefore subject to the state constitutional requirement that property has to be taxed uniformly.

Leaving out the emergency language could set up a worst-case scenario for progressive taxation fans: No court decision and a stinging defeat from the voters in November, which would likely kill momentum on any tax overhaul for years to come. Why go to all the trouble for that?

With a few days to go in the session, things will now move quickly. 

More coverage in The Spokesman-Review, Northwest News Network, and Associated Press.