By Angee Pogosian, Washington Bus Legislative Intern
Senate Bill 5096, which concerns a tax on capital gains, has been signed into law. I know what you’re thinking, “another tax?” Let me tell you, I’ve got a cracked windshield, a constant burden of not knowing how I’ll pay for college, and a friend who just Venmo requested me $5 for coffee. If any of this resonates with you slightly then rest assured this tax does not impact you financially; in fact it benefits the vast majority of Washingtonians. Before we get into how this can be, let’s go over the bill.
Senate Bill 5096 will impose a 7% tax on excessive capital gains of $250,000 or more. Capital gains are the profits made on the sale of investments such as stocks, bonds, and real estate. For example, say someone bought 150 shares of Amazon stock prior to the pandemic for $270,000 ($1,800 per share). During the pandemic the value per share went up to $3,500. If that person were to sell all their shares of Amazon, they would have a profit (capital gain) of $255,000. Who is able to spare $270,000 to invest to begin with? Not me, and probably not you. Only the wealthiest Washingtonians are able to afford large investments, giving them the opportunity to become richer during a global pandemic. Meanwhile working families across the state struggle to afford basic needs like housing and childcare. We must invest into our communities; we can do so when the rich pay their fair share.
Yes, this tax is fair. Washington State has the most upside down tax code in the nation. Working people pay proportionally more in income tax than their wealthiest counterparts. Gaining upward mobility and building wealth is increasingly challenging for poor people. Financial literacy is generally not taught in our public education system for working to middle class families to benefit from. Wealth is reproduced generationally from knowledge and resources that are passed down. Investing is a privilege which is becoming one of the few ways that wealth can be accumulated at all.
The revenues made from this tax would fund the Washington State Education Trust, childcare, and the Working Families Tax Exemption. When families are able to access quality education, childcare, and their basic needs, they are more likely to progress socio-economically for themselves and their posterity. Investing in our low and middle income communities benefits everyone, as families will have more money to circulate into the local economy and stabilize their lives. We appreciate Representative Frame for sponsoring this bill, and all the young people who worked hard to get it passed.