Earlier this week we mentioned a couple of tax proposals in Olympia: carbon, capital gains, B&O. Today, we’ll just update a couple of times.
At a time when nothing feels certain, the reemergence of a capital gains tax proposal (House Bill 2697) in Washington State is almost comforting. Some things never change.
But no matter how many times policymakers introduce capital gains tax legislation, there’s something else that remains constant: capital gains income is still income. A rose by any other name is just as sweet, and an income tax by any other name is just as constitutionally suspect.
He points out that proponents have argued that the capital gains tax is really an excise tax and therefore not a violation of the constitutional prohibition. The logic doesn’t hold, he argues.
Opponents have responded with a mix of bewilderment and exasperation. By this logic, why couldn’t you evade the prohibition on a broader income tax simply by styling it an excise tax on the privilege of earning income?
…Courts frown on such semantic games and prioritize substance over form—and especially over nomenclature. Just last year, when Seattle tried to impose a high earners income tax by calling it an excise tax, a court dispensed with the idea in short order. A tax that falls on income is an income tax, whatever the name.
The proposed legislation has a long way to go. It’s just been introduced. But such efforts always bear watching.
A version of Gov. Jay Inslee’s carbon-tax proposal took a key step forward Thursday night in the Washington Legislature.
Lawmakers approved SB 6203 in a vote of the state Senate Energy, Environment and Telecommunications Committee.
Inslee has for years introduced ambitious plans to fight climate change that have landed with a thud in the Legislature.
“It’s a big deal,” said Sen. Reuven Carlyle, D-Seattle, chair of the committee and sponsor of SB 6203. Carlyle said the bill passed out of committee on a 6-to-4 vote.
And, as we said of the capital gains tax, this one, too, has a long way to go.
The proposal, which next goes to the Senate Ways and Means Committee, still faces a steep road before getting to Inslee’s desk.
Democratic legislative leaders have been noncommittal about advancing the plan to full votes of the House and Senate.
The Times reports that the bill approved by the committee differs from the governor’s original proposal.
The new version of SB 6203 approved Thursday represents a substantial downsizing from the carbon tax proposed in an initial bill.
The legislation that moved Thursday would impose a $10-a-ton carbon tax — equivalent to about a 9-cent tax on a gallon of gasoline in 2019. It would climb each year by $2 a ton until it reaches a cap of $30 a ton.
Inslee’s initial proposal would have started with a $20-a-ton carbon tax, and increased each year with no cap.
Stuff to watch.