In 2021, politicians in Olympia introduced a capital gains tax, claiming it would support public education and childcare programs. However, this tax poses a significant threat to Washington’s small businesses and tech sector while doing little to address the deep-rooted issues in the state’s K-12 education system.
Alarmingly, lawmakers have indicated plans to expand this tax further. This November, voting yes on Initiative 2109 is essential to protect Washingtonians from this creeping income tax.
According to the IRS and common definitions, capital gains are a form of income, which is why every other state treats their capital gains taxes as income taxes. However, Washington’s constitution restricts such taxation, leading the state Supreme Court to label this tax an excise tax to bypass constitutional limitations. In reality, it is a thinly veiled attempt to impose an income tax by another name.
Public records have revealed that state politicians were fully aware of their actions—Sen. Jamie Pedersen has repeatedly confirmed plans to expand this tax to include all Washingtonians without needing a vote from the people.
This isn’t the first time Washington voters have faced such schemes; the public has rejected income tax proposals an astounding 11 times. I-2109 offers a solution by preventing politicians from sneaking an income tax past voters once again.
At first glance, the new capital gains tax may seem limited, targeting only the wealthiest residents. Currently, it applies to profits exceeding $250,000 from the sale of qualifying assets. However, lawmakers are already planning to lower this threshold to just $15,000 and increase the tax rate from 7% to 8.5%.
Although home sales and retirement accounts are exempt for now, the state’s track record suggests it’s only a matter of time before lawmakers broaden the tax to include more sources of income.
This capital gains tax is particularly unfair to small business owners, many of whom have dedicated their lives to building their companies. During challenging times like the COVID-19 pandemic, these entrepreneurs often sacrificed their paychecks to keep their businesses afloat and support their employees.
For many, selling their business is their only means of affording retirement. This new tax complicates that process, forcing them to work longer before enjoying the retirement they deserve. I–2109 would protect small business owners from this added burden.
The tech sector, a vital driver of Washington’s economy, is also at risk. Historically, Washington’s favorable tax policies have attracted some of the world’s most innovative companies.
Amazon, for instance, was founded here partly due to the state’s business-friendly environment. If the capital gains tax remains, it will penalize success, drive talent away, and deter future entrepreneurs from choosing Washington as their home.
Imagine how different Washington’s economy might be if Amazon had established its headquarters elsewhere.
Wealthy individuals and business owners are highly mobile; when taxes become too burdensome, they can—and do—relocate to more tax-friendly states. This is not a hypothetical scenario; it’s already happening. Jeff Bezos, Fisher Investments, and many others have left the state, taking with them jobs, investments, and new growth opportunities.
Importantly, Olympia did not need to impose this new tax in the first place. Over the past five years, Washington has enjoyed a $19 billion budget surplus, more than enough to fund education and childcare programs without adding financial burdens on citizens.
Voting yes on I-2109 will hold lawmakers accountable for prioritizing spending and using existing funds more efficiently, rather than relying on new taxes to address longstanding problems.
This November, the choice is clear. Voting yes on I-2109 protects Washington’s future by rejecting unnecessary taxation, safeguarding small businesses and entrepreneurs, and keeping the state’s economy vibrant.
It ensures that Washington remains a place where innovation thrives, opportunities abound, and hard-working people can retire with dignity.
I-2109 will protect small businesses, ensure the tech sector continues to thrive, and prevent everyday Washingtonians from facing an income tax in the future. Don’t let Olympia undermine Washington’s no-income-tax tradition.
Vote yes on I-2109 to secure your financial future and that of our state. Together, we can keep Washington a land of opportunity—for everyone.