March 8, 2021

Washington State Budget & Policy Center: Why Now Is the Time to Pass a Tax on Extraordinary Profits

ITEP Work in Action

Members of the Washington State Senate have an historic opportunity to create a more just state tax code while bolstering and sustaining our state’s fiscal and economic recovery long after federal recovery funds fade away. Senate Bill 5096 would create a new 7% excise tax on extraordinary profits from the sale of financial assets (capital gains) above $250,000 per year. If approved, this would be the most equitable change to Washington state’s upside-down tax code in nearly 90 years. And it would generate over $500 million per year in permanent new resources for child care and investments to help correct the upside-down nature of our tax code.

Because financial assets are so heavily concentrated among the very wealthiest households in [Washington state], SB 5096 would be paid only by those who can afford to pay more for investments in schools and other priorities that benefit us all. As a result, fully 99.8% of the capital gains excise tax would be paid by the richest 1% of Washingtonians, those earning a minimum of $660,000 per year, according to analysis from the Institute on Taxation and Economic Policy. No households earning less than $297,000 per year would pay any additional taxes under SB 5096.

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