Once again, Democrats in the state Legislature attempted to pass an income tax during the 2018 legislative session. Just as in 2015 and 2017, majority Democrats in the House built their budget proposal on the assumption that the Legislature would pass a new income tax on capital gains. This time there were a few new wrinkles.
This year’s proposal, House Bill 2967, attempted to use property-tax relief as a justification. The measure would have directed proceeds from the income tax to property tax reductions in the future. Because the tax would have taken at least two years to implement, it would have provided no relief for taxpayers who are complaining about the one-time increases in this year’s state property tax. Earlier Democratic income-tax proposals also have attempted to capitalize on topics of current concern, by earmarking tax collections for health care reform and K-12 education.
Ultimately this new income tax was rejected when majority Democrats in the House and Senate agreed on a budget that did not require its passage. They diverted money from the state Rainy Day Fund instead. But the debate demonstrated that the income-tax crusade is alive and well in the Legislature, and will likely return for debate in 2019.
- Fun fact: Even though the House budget proposal was built around the income tax, House Democratic leaders neglected to bring the tax bill to the floor of the House for a vote. This denied Democratic lawmakers the opportunity to take a recorded vote in favor of higher taxes.
Associated Press, Feb. 20, 2018: House Democrats’ budget plan relies on capital gains tax
Seattle Times, Feb. 20, 2018: Washington House Democrats propose taxing capital gains, ignoring Supreme Court on K-12 school funding