I read with interest the article about the new capital gains tax in Washington in the May 6 issue. I have been a resident of Washington for four years and have heard rumblings about this issue since that time.
The tax will be collected on investment sales with profits above $250,000.
The estimate is that this tax will collect $445 million from 7,000 taxpayers starting in 2023. As a former financial advisor, I did the math: assuming all 7,000 taxpayers pay this tax every year, this would be $63,571.43 in tax per taxpayer.
At a 7% rate, this would be a tax on $6.38 billion dollars of income on an average of $908,157 per taxpayer assuming all 7,000 taxpayers are hit with the tax every year (this won’t happen).
These figures are wildly optimistic and stretch credulity. They cannot be true. Either I misread the words or the article is wrong. However, I did read the passage several times.
Does the state leadership know what the effect of this tax will be? Thousands of capital gains transactions of $249,999.99 or less. They will not collect nearly as much in revenue as they think. This is another example of the figures being “fudged” to get something passed into law. I saw it when I lived in Colorado when legalized marijuana was on the ballot.
The wealthy have always had a great propensity to avoid taxes. The state of Washington is incredibly naive to think that the estimate will pan out. And the people who are to benefit from this will be disappointed.
Joel W. Muenchau