In the Washington Observer Paul Queary writes that “the real capital gains tax repeal initiative appears.” That’s probably right. As his headline suggests, it’s neither the first nor only initiative filed this year that takes on the controversial and currently unconstitutional state capital gains tax. A look at the Secretary of State’s initiatives page reveals a bunch of them, not a few of them appear to be variations on a theme.
Queary believes that the “Repeal the Capital Gains Income Tax” initiative (here’s the link; a number has not been assigned). may be the measure that qualifies for the ballot (hence the “real” initiative). It will take a lot of money just to get there, and much more to fund a campaign.
Just getting on the ballot could cost as much as $3 million7 because the pandemic and a robust initiative year in California are driving up the cost of signature gathering. Qualifying for November’s election will require 324,516 signatures from registered voters by July 8. The committee had raised less than $50,000 as of the end of February and was $100K in the hole to the aforementioned hired guns. (This presumably temporary lack of cash prompted us to rashly speculate that the campaign wouldn’t happen.) Somebody’s going to have to start writing big checks soon; those folks like to get paid.
The campaign itself could wind up costing $20 million or more. While thousands of people have millions of reasons to want this tax gone, very few would pay enough taxes to realize a positive return on investment on a five- or six-figure campaign contribution. The next round of filings to the Public Disclosure Commission, due April 11, should make for interesting reading.
If you follow the link to the initiative, after a preamble the measure simply repeals any mention of the tax. Queary writes,
First of all, it’s just a straight-up repeal, meaning that it would scrub Washington law of all mention of Senate Bill 5096 from last year, eliminating the 7 percent tax on most capital gains over $250,000, which is expected to bring in about $500 million per year when it’s fully implemented.
March 1, a superior court judge ruled that the tax is an unconstitutional income tax. No word yet on when the state Supreme Court will take up the case.