A Washington House committee yesterday (Friday) held a first hearing on a proposal to adopt a capital gains tax.
The House Revenue Committee took testimony on a proposal by Representative Kristine Lytton (D-Anacortes). It would impose a 7% tax on revenue gained from the sales of certain long-term assets, such as businesses.
In exchange, the state would lower the state property tax, which is increasing this year to fund public schools. The new tax would cover that, plus the cost of property tax exemptions for senior citizens, disabled people and military veterans.
Lytton believes her proposal would lower taxes for about 2.3 million property owners, while raising taxes for about 48,000 wealthy people.
"I looked at a revenue neutral approach. I’m not trying to feed the general fund. I’m not trying to buy other programs. I’m trying to keep people in their homes,” Lytton said at the hearing for her proposal.
Several wealthy people testified that they would be willing to pay this tax because it would make the state tax system more fair.
Several business owners disputed the assertion that this will only affect the wealthy. They include Claudia McClain, an independent insurance agent in Everett for more than 40 years.
“As I approach retirement, I plan on selling my business, ideally to my employees, so that McClain Insurance can continue in our ability to hire locally and to donate to local non-profits. For many business owners like me, the sale of my business is my retirement. That’s why so many business owners see this proposal as a retirement tax, one that rewrites the rules just as we’re preparing to pass the business on to the next generation,” McClain said.
The proposal is scheduled to get a vote on Monday to move it out of committee.