Oct. 25—In 2021, politicians in Olympia introduced a new capital gains tax, claiming it would support public education and child care programs. Unfortunately, this tax threatens to damage Washington's small businesses and tech sector while doing little to address the deep-rooted issues plaguing the state's K-12 education system. Worse yet, Olympia lawmakers have already made their intent to expand the tax clear. This November, voting yes on Initiative 2109 is essential to protect Washingtonians from this creeping income tax.

According to the IRS and the dictionary, capital gains are a form of income, which is why all other states treat their capital gains taxes as income taxes. Washington state's constitution restricts such taxation, so the state Supreme Court labeled this tax an "excise tax" to bypass the state's prohibition. In reality, this is a thinly veiled attempt to impose an income tax by other means. Public records revealed that state politicians knew exactly what they were doing — Sen. Jamie Pedersen confirmed time and again that he and some of his colleagues plan to expand the tax to all Washingtonians without needing a vote of the people.

This isn't the first time Washington voters have encountered such a scheme. The public has rejected income tax proposals a staggering 11 times. I-2109 offers a solution by preventing politicians from sneaking an income tax past voters yet again.

At first glance, the new capital gains tax might seem limited, affecting only the wealthiest residents. As it currently stands, the tax applies to profits exceeding $250,000 from the sale of qualifying assets. However, Olympia lawmakers are already planning to expand it. Senate Bill 5335 proposed lowering the threshold to just $15,000 and increasing 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.

The capital gains tax is especially unfair to small business owners, many of whom have poured their lives into building their companies. During tough times like the COVID-19 pandemic, these entrepreneurs often sacrificed their paychecks to keep their businesses afloat and take care of their employees. For many, selling their business is the only way they can afford to retire. This new tax makes it harder for them to do so, meaning they'll have to work even longer before enjoying the retirement they've earned. I-2109 would protect small business owners from this added burden.