Washington voters reject capital gains tax repeal

Washington voters have decisively rejected Initiative 2109, aimed at repealing the capital gains tax, with 63.2% opposing the measure. The tax, which imposes a 7% levy on profits exceeding $262,000 from long-term asset sales, was enacted in 2021 and upheld by the state Supreme Court. Proponents of the tax argue that its repeal would jeopardize funding for essential services, contributing up to $500m annually to education and child care programs. The Office of Financial Management estimates that eliminating the tax could result in a $2.2bn budget shortfall over five years. Brian Heywood, a hedge fund manager and supporter of the repeal, claimed the tax is a “backdoor” income tax, which Washington voters have historically opposed. A report from the Institute on Taxation and Economic Policy highlighted the tax’s role in making the state’s tax system fairer for lower earners.