One of Three Democratic Lawmakers Who Voted No on Capital Gains Tax Wants Focus on Transportation


A state senator from Vancouver was one of just three Democrats to vote against a capital gains tax that on Saturday passed the chamber by a single vote.

Sen. Annette Cleveland, from the 49th Legislative District, was among the nay votes. Only two other Democrats — Steve Hobbs of Lake Stevens and Mark Mullet of Issaquah — joined her in opposition.

Cleveland told The Columbian on Tuesday that she voted against the capital gains tax bill because she doesn't believe that it should be the Legislature's top revenue priority this session. By passing that tax, she asserted, the political will to pursue other revenue-raising bills will diminish among lawmakers and constituents alike.

"In the Legislature, there are only so many tax votes that there are going to be an appetite to pass this year," Cleveland said. "I don't think I could have been any more clear: I feel that first and foremost, we as a state have to look at passing those new revenue sources that are going to produce the highest return on investment, and that means infrastructure investment."

Cleveland, who serves on the Senate Transportation Committee, was referring to the Senate's 2021-23 Biennium Transportation Budget Proposals. That package proposes multiple transportation-related tax increases, including a 6-cent bump of the state's gas tax and a 50-cent-per-trip fee on Uber and Lyft rides. Depending on which of the two plans the committee pursues, the package could also result in a cap-and-invest greenhouse gas emissions program (expected to raise $5.16 billion over the next 16 years) or a carbon fee ($8.5 billion over 16 years).

Transportation-related projects like replacing the Interstate 5 Bridge should be the Legislature's top priority, Cleveland said.

"I feel strongly that that's what we need to be focusing on," she added. "That's the revenue we need to be passing."

Saturday's capital gains bill would impose a 7 percent fee on revenue over $250,000 made from selling stocks, bonds or other high-end assets. Real estate, farms, forestry and retirement accounts would be exempt.

The tax would also apply to sales of businesses that bring in at least $10 million in annual revenue, if the seller makes more than $250,000 on the transaction.

The measure is headed to the state's House of Representatives, where a Democratic majority is likely to advance the bill to Gov. Jay Inslee's desk. Ahead of the current legislative session, Inslee had advocated for a capital gains tax as the cornerstone to his COVID-19 recovery budget.

As written, the capital gains tax would raise an estimated $500 million per year. Senate Democrats report it would affect between 16,000 and 18,000 people in the state.

Clark County senators in opposition

The other two state senators from Clark County, Ann Rivers and Lynda Wilson, spoke out against the capital gains tax bill in a four-hour debate before Saturday's vote.

Rivers and Wilson, both Republicans, said that the bill amounted to the kind of income tax that has already been struck down repeatedly by the state's Supreme Court. Senate Republicans were united in opposition to the bill, which passed the chamber by a 25-24 vote.

"This is an income tax. Every other state in the union calls it an income tax," Wilson said during the floor debate.

"I'm sitting and I'm listening to my colleagues talk about how this is on the 1 percent, on the uber-wealthy, and it's going to take care of the most underprivileged among us. And the only thing that keeps running through my head is, 'for now,'" Rivers said. "There are many of us who understand the ultimate goal, which is a statewide income tax."