What is Initiative 2109?

In NWPB’s recent election survey, many of you requested information about Washington’s ballot initiatives. With that in mind, here’s a quick look at Initiative 2109. 

Initiative 2109 would repeal the state’s capital gains tax.

People pay this tax when they earn more than $262,000 on the sale of stocks, bonds or other investments. Profits from the sale of real estate and small family businesses, as well as retirement earnings, are exempt. 

Last year, fewer than 4,000 Washingtonians paid this tax. That’s less than one-tenth of 1% of the state’s residents.

In the two years since it’s been introduced, the capital gains tax has raised more than $1.2 billion for childcare subsidies and K-12 education. 

But some say it’s a backdoor income tax that is pushing businesses and entrepreneurs out of the region. They point to Jeff Bezos, who moved last year from Washington to Florida, one of eight states that doesn’t have a capital gains tax. 

The effort to repeal the capital gains tax was sponsored by Let’s Go Washington, a PAC founded by hedge fund manager Brian Heywood. Supporters of the initiative say that Washington needs to reign in its spending instead of levying more taxes.

I-2109’s opponents include Bill Gates, teachers unions and the League of Women Voters. They say repealing the tax would take money away from schools and families. 

Opponents of the initiative also note that Washington has the second most regressive taxation system in the nation, which means that low- and middle-income families turn over a much higher share of their paychecks to taxes than wealthy families do. They say the capital gains tax is one way to even the playing field.