Voters advise against a capital gains tax, with 63% favoring repeal.

Among the least surprising outcomes of yesterday’s election was the overwhelming rejection of the state’s new, contested, and controversial capital gains tax. Advisory Vote No. 37 read:

The legislature imposed, without a vote of the people, a 7% tax on capital gains in excess of $250,000, with exceptions, costing $5,736,000,000 in its first ten years, for government spending.

This tax increase should be:

  • Repealed
  • Maintained

As the results at the top of the post show, 63% of the voters favor repeal. This being Washington, there are still ballots to count, but those numbers are highly unlikely to change. Every time the question of an income tax has been put to the voters since the mid-1930s, they’ve rejected it by margins ranging from 57% to 78%. Usually, the measures go down about 2-1, like yesterday.

The Seattle Times reports

Washington’s advisory votes are nonbinding and do nothing to change existing law, but allow voters to sound off on tax bills passed by the Legislature.

The advisory vote on the new tax was trailing by 24 percentage points.

Prior to the election, the Tax Foundation commented,

Legal challenges to the tax are already pending and may ultimately do more to stop it in its tracks than can a nonbinding advisory vote. Nevertheless, the fate of Advisory Question 37 is an important one, not only because the capital gains tax itself would be economically harmful, or because it shows an irreverence for the state constitution, a concern in its own right. It’s also important because if voters signal their opposition to taxing this specific class of income, that sends a strong message that they are decidedly uninterested in efforts to scrap the state’s ban on a broader income tax.

The Seattle Times editorial board urged a “repeal” vote, writing,

A judge will decide whether the Washington Legislature’s hastily enacted capital-gains taxviolates the state constitution, but voters should signal their displeasure by encouraging lawmakers to repeal Advisory Vote No. 37

Advisory votes don’t repeal the law, but they do reveal public opinion about revenue-increasing legislation. They are an artifact of a voter initiative requiring any legislative tax or fee increases to appear on the ballot.

The least state lawmakers deserve for their premature maneuver is a collective thumbs down from the people they’re supposed to represent.

The message was delivered. How will it be received?