The Washington state Senate passed a new capital gains tax on the sale of high-profit stocks, bonds and other assets on Sunday, sending the bill to Gov. Jay InsleeJay Robert InsleeThe Hill's Morning Report - Biden, NATO eye 'all scenarios' with Russia Legislatures move to limit governor powers after pandemic What if politicians were required to tell the truth? MORE (D) to sign.
The measure, if signed into law, would levy a 7 percent tax on the voluntary sale of stocks, bonds and other capital assets that earn profits that exceed $250,000 for both individuals and couples.
Tara Lee, a spokeswoman for Inslee, said on Friday that the governor would sign the bill if it makes it to his desk by the end of the year’s legislative session, which was set to end on Sunday.
According to the bill, the tax would be implemented to “help meet the state’s paramount duty,” which is to provide all Washington children with an education, in turn “creating the opportunity for the child to succeed in school and thrive in life.”
Specifically, the bill says the money raised through the tax will be used to fund K-12 education, early learning and child care, in addition to providing all children with an education.
Business owners, however, are not subject to the tax if they were regularly a part of running the company for five of the previous 10 years before selling, have owned the business for a minimum of five years and earned $10 million or less a year before the sale, according to The Associated Press.
Qualified family-owned small businesses, residential and other real property and retirement accounts are also exempt from the tax.
If signed, the tax would be imposed in 2022. According to the AP, the measure is expected to bring in $415 million in 2023, just one year into its existence.
The legislation cleared the Democratic-majority Senate in a close 25-24 vote after passing through the state House Saturday night in a 52-44 vote.
The measure, however, is likely to face legal challenges from opponents who believe the tax breaches the state constitution, according to the AP.
The passage of the measure will likely also set up a major tax fight in the state.
Opponents of the tax have called the measure a job-killer that could hurt small and multigenerational businesses.
The bill now sits on the desk of a governor whose state is home to the two richest men in America: Amazon CEO Jeff BezosJeffrey (Jeff) Preston BezosCan our nation afford higher interest rates with the current national debt? Free speech, Whole Foods, and the endangered apolitical workplace Space: One important thing that might retain bipartisan focus MORE and Microsoft founder Bill Gates.