Last week, Washington State passed a capital gains tax aimed at the state’s ultra-wealthy. The tax is historic because Washington, despite its progressive reputation, until now had the worst tax code in the nation when it comes to fairness, behind Texas, Florida, and South Dakota.
A landmark 2018 report by the Institute on Taxation and Economic Policy found that the poor and working class pay 18 percent of their income in state and local taxes, while the ultra-wealthy only pay 3 percent.
“It’s so upside-down. . . . It’s completely out of step with our values,” Rep. Noel Frame, a champion for tax reform in Washington’s legislature, told me.
This “mismatch” is due to years of rigging by the state’s corporations and billionaires, including Amazon’s Jeff Bezos, the world’s richest person, and a group of corporate Democrats beholden to them.
Besides the unfairness and inequality, the state’s tax system has struggled to raise revenue and has long been underfunding basic services, most notably education.
This crisis reached a boiling point in 2012, in McCleary v. Washington, where the state Supreme Court found the legislature was failing to uphold their constitutional duty to provide education for Washington’s kids. Three years went by and the legislature failed to take adequate action — so the court began fining the legislature $100,000 a day and putting the funds toward education.
Finally, in 2018, the court found the legislature had done enough and ended the case. But Washington’s schools still suffer from inadequate infrastructure. Ramy Khalil, an educator and Democratic Socialists of America (DSA) member in Seattle, told me, “There’s literally brown drinking water in the schools. There are signs that say don’t drink the water in the bathrooms.”
A University of Washington study from 2017–2020 of 551 Washington elementary schools found 82 percent had at least one fountain or faucet with dangerous amounts of lead according to the American Academy of Pediatrics. Lead causes brain damage and other developmental issues in children.
As Washington’s kids literally drink poisonous water and record numbers of residents become homeless, Washington’s billionaires, like Jeff Bezos and Bill Gates, have seen their fortunes grow to record heights during the pandemic. Washington’s billionaires had $293 billion as of two years ago; today they have over $474 billion.
It is amid this backdrop that, finally, this year, the Democrat-controlled state government passed a 7 percent capital gains tax on profits greater than $250,000 from the sales of assets, such as stocks and bonds, to fund K-12 education. It is estimated that seven thousand individuals will pay the tax, or the wealthiest top 0.09 percent of the state.
“Essentially, you have to have around $3 million invested in the stock market for this to even begin to apply to you — we’re talking about folks with a massive amount of wealth,” explained Emily Parzybok, director of the Balance Our Tax Code coalition.
The bill was first proposed in 2012 — and its passage nine years later is the result of long-term, strategic-minded left institution-building and electoral work.
A number of questions are worth considering: How did Washington come to have the most regressive tax system in the nation? How did the once-powerful anti-tax, pro-corporate Democratic caucus known as the “Roadkill” Democrats lose that power? Is the capital gains tax enough to fix the tax code? What can leftist organizers and legislators in other states learn from Washington’s experience?
The Origins of Washington’s Worst-in-the-Nation, Upside-Down Tax System
Washington State owes its deeply regressive tax system to a series of events in the 1920s and ’30s, when a progressive, populist, urban-rural New Deal–type coalition came within inches of progressive reform and was defeated by the courts.
At that time, Washington relied heavily on property taxes, a carryover from its territorial days, which fell heavily on farmers. As the state urbanized and infrastructure needs grew, property taxes were doubled between 1910 and 1920. This hit farmers especially hard, who were already dealing with the postwar agricultural recession.
In response, farmers organized for tax reform through the Washington State Grange, a fraternal, grassroots farmer organization. The Grange demanded property tax relief, calling for “industrialists” and the wealthy to pay their fair share.
In 1924, the farmers sponsored a statewide initiative to limit property taxes and in 1928 supported another amendment to allow the taxing of intangibles like stocks and bonds. Both were defeated.
The Great Depression compounded the tax crisis, and farmers were increasingly unable to pay their property taxes. The Grange shifted its focus to a graduated income tax and in 1932 collected sixty thousand signatures to place the income tax, Initiative 69, on the ballot. They built a coalition with progressive urban allies, including the Washington Education Association (teachers’ union), Seattle Labor Council, Parent Teacher Association, and Unemployed Citizens League.
Grange members campaigned with gusto, with one farmer journeying from the small rural town of Colville across the mountains to Seattle in September before the election. He recalled, “During that six weeks I drove 2,500 miles all inside the city of Seattle practically, and I averaged about seven or eight meetings a day.”
The hard campaigning paid off, and I-69 passed with 70 percent of the vote, with rural counties supporting it with the highest margins. This was the same election that brought Franklin D. Roosevelt to power — clearly, the political winds were blowing to the left.
As is often the case, business interests sought to block it in the courts. A lower court ruled in favor of their suit, holding that income was property and arguing that therefore the graduated income tax was in violation of the “uniformity clause” of the state constitution, which says all property must be taxed uniformly.
The state appealed the ruling to the state Supreme Court, which was expected to rule in favor of I-69. But in a stroke of extraordinarily bad luck, one of the pro-tax justices fell ill, and the court was deadlocked at 4-4. The stricken justice eventually resigned, and a new pro-tax replacement was appointed, but just then, another justice flipped (some speculate due to the arrival of the income tax forms in the mail), and the will of 70 percent of Washingtonians was overturned 5-4.
As a result, the state legislature passed a business and occupation tax to address the state’s fiscal crisis. That, combined with a successful initiative limiting property taxes, quickly deflated momentum for an income tax. In 1934, a constitutional amendment that would have allowed for a progressive income tax was defeated by voters 43-57.
Since then, personal and corporate income taxes have been on a long losing streak in Washington — they have been defeated ten times at the ballot box through the 1940s, ’70s, ’80s, and most recently in 2010.
The failed 2010 measure, Initiative 1098, is worth reviewing. The income tax would have only affected the wealthiest 1.4 percent of the state, individuals making more than $200,000 or couples making more than $400,000. The initiative would have reduced the business and occupation and property taxes and put any increased revenue toward education or health care. The campaign was initiated and co-chaired by Bill Gates Sr, father to the Bill Gates we know.
Tech billionaires Steve Ballmer and Jeff Bezos, along with corporations like Microsoft, Boeing, and Trident Seafoods, spent heavily to oppose it. The opposition branded the initiative as a “job-killer,” using prominent business people as messengers, and focused on the idea the income tax would be expanded by the legislature to affect everyone.
The initiative lost by a considerable margin: 64 to 36.
Ramy Khalil, the educator and DSA member, recalls volunteering for I-1098. He attributes the loss in part to a lack of help from the Democratic Party who may “rhetorically support taxing the rich” but are “not seriously committed to it.”.
Indeed, then Democratic governor Christine Gregoire began her statement endorsing the measure with a tepid, “I’m not a big proponent of an income tax.”
The pro-income tax campaign made missteps, playing into the opposition’s anti-government framing with one TV ad saying, “We all know that politicians in Olympia won’t solve our problems, but we can.”
“Republicans went all out against it,” said Khalil. “And big business and the corporate media went all out against it. And they crushed it. It was kind of a one-sided war.”
With the resounding defeat of I-1098, any opportunities for statewide progressive revenue seemed to lie with the legislature passing other types of progressive taxes, such as a capital gains tax or estate tax. However, everyone knew that none of these ideas would pass the State Senate, even when Democrats controlled the chamber. At least not until now.
The Rise and Fall of the Roadkill Democrats
In 2010, the same year I-1098 failed, Washington was facing a $2.8 billion budget shortfall in the wake of the Great Recession. While a few progressives in the legislature wanted to tax the wealthy and Wall Street banks to avoid cuts, pro-corporate Democrats were content to raise the sales tax, a highly regressive tax, and slash funding for K-12 education, higher education, mental health care, state employees’ health care, and services for low-income seniors. They also wanted to lay off thousands of state workers.
This pissed off organized labor. One union, the Washington Federation of State Employees (WFSE), was so outraged at the Democrats that year that it only endorsed one Democratic incumbent in the Senate.
That election season, the Washington State Labor Council PAC spent aggressively in primaries against corporate incumbents. One conservative Democrat, Rep. Christopher Hurst, went so far as to describe these challenges as “ethnic cleansing.”
Facing an angry labor left, the corporate Democrats unified. “It’s time now for moderates to join together. We shouldn’t be afraid,” Senator Steve Hobbs told the Everett Herald.
And thus, the Roadkill Caucus was born.
Sen. Mark Mullet, a Roadkill Caucus member, explained the name to me, “The idea was if you’re in the middle, you’re getting run over from both sides — the far left and far right — that was the premise of roadkill.”
Due to the Democrats’ slim 27-22 margin in the State Senate, the Roadkillers held enormous leverage, not unlike that wielded today by Joe Manchin or Kyrsten Sinema in the federal Senate. One headline from the Everett Herald in 2011 read: “Roadkill Caucus largely gets its way in Olympia.”
In an interview, Sen. Mullet explained why he felt the caucus was a good fit for him ideologically. “I became a Democrat through Bill Clinton. I graduated from college in 1994, so my first years out of college, he was in charge. And I felt socially liberal, fiscal conservative, like actually balancing the federal budget,” Mullet said. “I feel like I’ve been that way the entire time.”
“The party has definitely, in our state, in the last decade, has shifted heavily to the left,” he added.
A key architect and embodiment of that shift is Rep. Noel Frame, who helped build the infrastructure to elect progressives from 2010–2015 as the director of Progressive Majority and later joined the legislature herself in 2016.
While Sen. Mullet was leaving college to work for the Swiss bank UBS in the mid-nineties, Frame had her formative political experiences as a high schooler in Clark County, a conservative rural area in the state. She told me her school could not pass local levies “to save its life” due to an arduous supermajority requirement.
“They ran and lost three levies in the four years I was in high school,” she said.
School districts were forced to try to pass local levies because the state was not fully funding basic education. And if they couldn’t, teachers and students paid the price.
“We just literally got less in terms of our basic education. And I knew as a high school student what was happening,” she told me.
Frame later volunteered on a campaign to overturn the levy supermajority requirement and became “really motivated to fix the tax code the more and more I learned about it.”
“That was starting out as a sixteen- or seventeen-year-old, and now I’m 41 and still working on the same issue,” Frame told me, with a rueful laugh.
Since then, Rep. Frame has been joined by other progressives, while the Roadkill Caucus has dwindled from eight senators and sixteen Representatives to two Senators in an unofficial caucus and a defunct House caucus. The caucus began its implosion in 2012 after two Senate members decided to caucus with the Republicans in exchange for increased power, and since then, most have lost or retired.
One corporate democrat who closely aligned with the Roadkillers, Sen. Guy Palumbo, resigned from the legislature in 2019 to take a job as a lobbyist with Amazon. He was replaced with a pro-capital gains tax vote.
Hobbs and Mullet are the last caucus members remaining in the Senate. And Mullet nearly bit the dust last year. A nurse and union member, Ingrid Anderson, came within fifty-eight votes of defeating Mullet in the highly contested race, where labor and big business each spent over a million dollars for their respective candidates.
Kamau Chege, the manager of the Washington Community Alliance, a political coalition of organizations led by people of color and tribes, told me it’s clear that the unofficial Roadkill Caucus’s days are numbered.
“It’s a caucus in decay, not one of rising power,” Chege said.
Messages and Messengers for Taxes
While electorally oriented progressive institutions were building power, another group of media and legislative-oriented organizations were growing too.
The year 2018 saw the launch of the Balance Our Tax Code coalition, primarily funded by SEIU 775, a union of home care and nursing home workers, and Civic Ventures, a think tank founded by progressive billionaire Nick Hanauer.
The coalition saw a need for public education around the tax code. Emily Parzybok, its executive director, told me that most voters were rightly feeling “tax-exhausted” but were unaware the wealthy were paying such a lower rate, and in general, there was “a real lack of narrative” for the Left around taxes.
“In the early days, learning about the messaging, it became clear that our opposition has very clear messages,” she explained.
Her coalition teamed up with the progressive group Fuse Washington to develop a messaging guide and succeeded in popularizing the phrase, “balance our upside-down tax code,” which is far more understandable than the wonky “regressive.”
The guide also urges a race-class narrative structure, which Chege told me “almost everybody” was using.
“[They’re] not trying to make or overemphasize identity-based arguments to spin what’s obviously very much a class conflict,” said Chege. “At the same time, it wasn’t [class]-reductionist. People were talking often about the racist impact of our tax code.”
Recently, it has been argued that this type of narrative may not be the most effective in winning over the public. A new study by Yale political scientists looked into whether class or class plus race frames were more helpful in persuading voters on economic issues and found class frames were most effective, including with African Americans. (The class plus race frame from the study emphasizes discrimination and is different from the Race Class Narrative, which emphasizes multi-racial solidarity and standing up to ‘divide and conquer’ strategies from the wealthy. In practice, I did not hear many legislators or organizers using the latter narrative.)
But when it comes to persuading Democratic legislators, staffers, and their associated complex of nonprofits and activists, a race-class narrative is undoubtedly the stronger approach right now.
The guide also advises using the word “share,” as in “wealthy pay their fair share” instead of “tax burden” or “tax relief” which “reinforce the notion of taxes as an affliction.” Another tip: say “knee-jerk cuts” or “deep cuts” instead of “austerity,” noting the latter is a wonky word most people don’t know.
Some of the Left may question the effectiveness of this specific messaging. After all, when Americans are polled on whether they want to tax the wealthy, they consistently show around 70 percent support for the idea.
But those polls alone don’t tell the whole story. Chege, who is also a member of Seattle DSA, explained: “We don’t have the luxury of messaging in a vacuum. On their own, these bills are quite popular. Where the rubber meets the road is when the business lobby will paint these taxes as hurting the economy.”
Chege identified other factors at play: the Democratic Party’s low credibility with voters as compared to, say, the Chamber of Commerce, as well as low unionization rates and a dearth of trusted, institutional counterweights to big business.
For example, while Amazon may be near universally hated among leftists, the corporate behemoth enjoyed 91 percent favorability ratings as recently as December 2019, making it one of the most popular institutions in the country.
This dynamic might have explained how Initiative 1098 was crushed in 2010 despite polls at that time that showed support for taxing the wealthy.
Fortunately, for tax reformers, Washington’s big businesses, such as Boeing, Microsoft, and Amazon, didn’t weigh in on the capital gains tax issue, according to legislators I spoke with.
Sen. Mullet, who is close to the state’s corporate world, told me Amazon and Microsoft may have predicted the capital gains measure was going to pass after progressives picked up a seat in 2020 and didn’t want to risk burning political capital opposing the tax. “I think, sometimes, what people will say privately to me is different from what they’d say publicly,” he said.
Another key tactic this session was the mobilization of small businesses to rebut the message that these taxes were bad for the economy. A new labor-backed group, Invest in Washington Now, organized a small business sign-on letter and recruited them to testify on how progressive taxes will help small businesses flourish by funding childcare and other programs.
“You see how powerful the messengers are,” said Chege. “It put the opposition in a corner. It’s part of why the Republicans, when they actually had to debate on the floor, had such a hard time coming up with stuff.”
When Republicans found themselves unable to argue on moral grounds, they focused on calling the capital gains tax an income tax and therefore “unconstitutional.” This triggered a flood of alliteration in their caucus, with the bill being described also as “unfair, unnecessary, unstable, unpopular.”
One other especially effective group of messengers proved to be rich people who want people like themselves to be taxed. Balance Our Tax Code’s Parzybok gave credit to Dan Price, the long-haired tech CEO famous for instituting a $70,000 minimum wage, Nick Hanauer, Sonya Campion of the Campion Foundation, and others.
This doesn’t mean the wealthy were all treated with kid gloves or that class conflict was avoided.
The narrator in the ad reads over a catchy country-rock guitar tune:
“This year, Washington took a hit. And we’re getting through it, together. Now, here’s the question: Do we throw another punch at the people who’ve been hit the hardest? By cutting funding for communities — like small businesses, teachers, essential workers, the people on the front lines? Or do we raise taxes on those at the very top — and make smart investments, keep money in the hands of Washington families and build our small businesses and communities back stronger? The choice is ours.”
Senator Joe Nguyen, called “an AOC of Washington” by Seattle newpaper the Stranger, struck a similar theme, focusing on the choices we face as a society in an interview with me: “Should I try to create the system in which we can solve homelessness, or should I have this billionaire buy another spacecraft?”
Finally, a Capital Gains Tax
The capital gains bill finally passed in the 2021 legislative session, nine years after it was first introduced in 2012.
While the Roadkill Democrats caucus had weakened over the years, the final breakthrough was T’wina Nobles, a progressive who beat an incumbent Republican in the Tacoma area in 2020, while running proudly on capital gains and tax fairness.
The events of 2020 also brought new energy into progressive pro-revenue institutions.
With COVID-19 giving impetus to a greater reckoning around inequality, the Balance Our Tax Code coalition rapidly grew by 30 organizations, spanning groups from labor to immigrant rights to climate to public health. “And, for the first time this session, every coalition partner made revenue the central demand,” Parzybok said.
Similarly, Black Lives Matter protests in the wake of George Floyd’s murder brought new energy and people into left institutions.
“It’s hard not to see the progress of the capital gains tax outside of last year’s protest,” said Chege from the Washington Community Alliance. “There’s been a lot of talk about defund. But what they also did was bring a lot of people out to the streets to hear progressive and populist messaging. And it’s one of the reasons why you had thousands of people sign in to support the capital gains and wealth tax.”
With record enthusiasm for tax reform and T’wina Nobles in the Senate, the capital gains bill passed the Senate 25-24. Every Republican and three Democrats (including two Roadkillers, Mullet and Hobbs) voted against it.
Sen. Nguyen told me the opposition was coming from districts that largely wouldn’t pay the tax to begin with. His reaction to that was, simply, “Get the fuck out the way.”
The bill then went to the Democrat-controlled House where it was amended further and passed handily 53-45. Democratic governor Jay Inslee signed the bill last month, saying, “We refuse to live [in] and accept a society of massive poverty amongst massive wealth.”
Lessons for the Left
There are some lessons to be learned from the bill’s policy evolution, because the final bill is substantially different from the original proposal.
Rep. Alex Ramel, a House Finance Committee member, told me that in order for a tax to be popular, it needs to pay for popular stuff like education.
The original bill put capital gains revenue into the state’s general fund but was amended to fund K-12 education and a taxpayer fairness account. Then, finally, only K-12 education.
The importance of this strategy has previously been highlighted in Jacobin in the context of ballot initiatives in California and Arizona in 2020. The Biden administration is doing the same with a proposed federal capital gains tax increase to specifically fund education and childcare.
Another lesson is that as taxes on the wealthy are increased, there should be a concurrent reduction in taxes on the working class.
“Writing the tax code is a two-sided thing,” said Balance Our Tax Code’s Parzybok.
To do this, the legislature funded the Working Families Tax Credit with bipartisan support. That bill will send $300 to $1,200 “tax credit” checks to 420,000 low-income Washingtonians beginning in 2023.
“People have the idea that the Left wants to tax ordinary working people and middle-class people . . . that’s a disaster,” said Khalil, the educator and DSA member. He told me the Left needs to do a better job of explicitly disavowing that notion, not just in rhetoric but in policy, by reducing taxes on working people.
Third lesson: the details matter, and be prepared for an onslaught of disinformation. To ensure the tax wouldn’t affect ordinary people in edge cases (and in anticipation of the opposition), the bill authors wrote exemptions to ensure that the tax would not apply to livestock, timber and timberlands, retirement accounts, and a few other types of capital. In response to public feedback during the session, additional exceptions were added such as commercial fishing privileges (similar to New York City’s taxi medallions).
Still, opponents of the tax acted as if those exemptions didn’t exist.
“We had a lot of folks testifying about their deep fear of losing their retirement, and that’s such a valid human concern,” said Parzybok. “We had very clearly said that’s not something we’re taxing and the opposition would just continue to whip up fear around those things . . . it was hard to watch.”
Republicans also fearmongered about wealthy people leaving the state (a myth that has been empirically debunked), which led to entertaining exchanges on the House floor.
“The good gentlemen from the 4th just said earlier today that people are going to move to Idaho,” said Rep. Pat Sullivan during the House floor debate. “Well, guess what, Idaho has a capital gains tax.”
However unmoored from reality, this pattern of disinformation from right-wing officials and organizations is one of the top reasons why Democratic lawmakers may be hesitant to support progressive taxes.
John Burbank, head of the progressive Economic Opportunity Institute, told me he expects a “significant multimillion-dollar campaign of disinformation” against legislators who voted for capital gains.
“It’s not germane that the tax only affects, what, 10,000 people in the state,” said Burbank. “What’s germane is the mailings and the social media that would go out attacking legislators for voting for this … they put into the public mind that any new tax is a tax increase on everyone, which is ridiculous, but they’ve been successful in that.”
Burbank’s preferred solution to this issue is connecting higher taxes on the wealthy to an “immediate” reduction of regressive taxes or a very tangible public benefit, like free community college.
It’s hard to know whether the capital gains tax’s funding for K-12 education or the Working Families Tax Credit will be tangible enough for the average voter.
While the bill’s specific exemptions were key in countering disinformation, the most substantive changes to the bill over time have been about who pays and how much.
Taxing the Super-Super-Wealthy (Not the Wealthy)
The history of the state’s mostly failed capital gains bills reveals a steady shift to exempt the upper-middle class and wealthy from paying, leaving a tax just on the super-wealthy.
The first bill, proposed back in 2012, would have taxed capital gains at a rate of 5 percent on profits of more than $5,000 for individuals and $10,000 couples.
The original bill this year proposed a rate of 9 percent and a threshold of $25,000 and $50,000. And then, not long after the bill was introduced, the bill sponsor, Sen. June Robinson, decreased the rate to 7 percent and dramatically increased the threshold to profits more than $250,000 (the same for individuals and couples). At that point, you’d need more than $3 million in the stock market to be affected.
This change means instead of the wealthiest 40,000 Washingtonians (half of “the 1 percent”) paying the tax, only the top 7,000 ultra-wealthy Washingtonians (one-tenth of the 1 percent) will pay.
The change was not publicly opposed by any of the state’s progressive organizations.
When I asked Parzybok whether it was a political strategy aimed at not alienating the lower tier of the wealthy, she said, “There’s definitely a political element to it, but we’re genuinely focused on asking the wealthiest among us to pay their fair share … the cap allows us a first step.”
One possible explanation is that the Democratic coalition has been steadily getting more affluent, a fact that Jacobin’s Matt Karp has written about previously. You can see this in Biden’s commitment to not raise taxes on anyone making under $400,000 — hardly a middle-class salary.
Looking at the big picture, it’s clear the capital gains tax is a modest first step.
According to the liberal Budget and Policy Center, a few ultra-wealthy households will see their state tax bills rise by a measly 0.9 percent of their annual income.
This means the ultra-wealthy will now pay 3.9 percent instead of 3 percent. Their effective tax rate will still be among the lowest in the country.
All the progressive revenue proponents I spoke with agreed on the need for more action and change.
Rachael Myers, the director of the Washington Low Income Housing Alliance, who helped lobby for the bill, said, “If we could pass a capital gains tax this year, both advocates and lawmakers are going to feel emboldened to do something even bigger, something more in the future.”
A Wealth Tax Next?
Continuing the trend of taxing the super-wealthy, this legislative session also saw the introduction of a wealth tax on billionaires, sponsored by Rep. Noel Frame. It was so popular that it broke records for people “signing in” to support a bill during the remote legislative session. Supporters testifying outnumbered the opposition 47 to 3.
Frame attributes the excitement to the idea being “enormously populist — it’s an issue of basic fairness.”
The regular anti-tax business groups, like the Washington Association of Business and the Seattle Chamber of Commerce “very publicly stayed out, because according to them, it doesn’t affect their members” Frame said.
Senators Bernie Sanders and Elizabeth Warren introduced and popularized the idea of a wealth tax in the Democratic 2020 presidential primary. The idea enjoys broad public support when framed neutrally in polls.
Frame’s bill is a 1 percent wealth tax that would tax Washington billionaires’ worldwide fortunes after their first billion. The tax can’t exceed 1 percent due to a legal requirement from the state constitution regarding taxation.
Despite the low 1 percent rate, because Washington is home to such immense wealth, the bill is expected to raise $2.5 billion a year. With that amount, there is a potential for real transformation. Legislators could reverse the decades-long defunding of public services and significantly lower regressive sales and property taxes.
Washington wasn’t the only state that saw a wealth tax introduced this year. Assembly member Alex Lee in California, also a DSA member, introduced a similar bill in his state, but the Democratic leadership didn’t even let the bill get a hearing.
Frame’s bill passed out of the House Committee on Finance, which she chairs, and didn’t make it any further. Frame told me she didn’t see it as a bad thing — bills rarely pass in their first year of introduction, and the tax still had “some [policy] details to be worked out”.
Sen. Nguyen agrees and thinks the focus on capital gains was essential.
“The Left doesn’t always align on what they want to accomplish. That ambiguity is how moderates kill bills,” said Nguyen.
In future sessions, the wealth tax could experience the same watering-down process that affected the capital gains tax, cutting revenue significantly.
I asked Burbank of the Economic Opportunity Institute if he thinks advocates for various causes, such as higher education or housing, are not asking for enough, so that legislators are not feeling significant pressure for new revenue.
“You’re correct — they’re not asking for enough,” he replied. “A part of that is there’s been incremental disinvestment over the years, so people have sort of accustomed themselves to the changes year after year.”
Myers, the executive director of the Washington Low Income Housing Alliance (WLIHA), said the state’s affordable housing crisis alone demands greater progressive taxation and revenue.
However, WLIHA could be contributing to the legislators’ lack of knowledge about how much revenue is truly needed. Myers told me her organization, when lobbying, often strategically doesn’t share the full gap number — around 150,000 units — because it could reduce legislators’ support for funding 4,000 or 5,000 units (WLIHA’s perception of the politically possible), which are still “really, really important”.
It’s a tough situation for advocates like Myers, but perhaps with a wealth tax on the table, WLIHA will be more transparent about the full need.
But in a sign of battles to come, Roadkiller Sen. Mullet maintains the budget is “flush with cash” and does not need any more revenue.
The Outlook for the Future
The capital gains tax, while modest, is inarguably a big achievement given Washington’s history. It only passed due to the incredibly diverse coalition of actors, from SEIU home care aides to class traitors like billionaire Nick Hanauer, and years of institution-building that led to this moment. All deserve to be recognized and celebrated. When seen in light of the final 25-24 state Senate vote, the relative timidity of the capital gains tax is more understandable.
But, if the labor left can finish what they started and continue to pick off corporate barnacles like Sen. Mullet, and organizations like Invest In WA keep their foot on the pedal of public education (more killer ads, please), bolder policies will likely pass.
These public education and outreach efforts should include rural areas, not just “suburban swing districts.” Farmers and rural workers would benefit from a progressive tax code, as the Grange of the New Deal era understood.
And critically, everyday Washingtonians will need to feel the tangible benefits of programs made possible by progressive revenue, like the working families’ tax credit checks. The rollout and competent administration of this program will matter.
Moreover, future progressive taxes are less likely to be watered-down if there are some Democratic socialist legislators to hold the line. The DSA in Washington has not yet elected a member into the legislature, unlike the DSA elsewhere, such as in Maryland, Pennsylvania, or New York, where there are five elected Assembly members and two Senators.
Khalil told me Seattle DSA grew from 1,000 to 2,000 members in the last year and noted that DSA is nearing 100,000 members across the country.
Hopefully, this momentum can slow or reverse class dealignment and create a durable, majoritarian coalition to right the upside-down tax code, one where the wealthy (ultrarich and rich) pay their fair share.
Now that Gov. Inslee has signed the capital gains tax into law, a lawsuit from the right-wing Freedom Foundation already awaits it, which argues the tax is an “income tax” and therefore unconstitutional. It remains to be seen whether the courts will repeat their role from 1933 and quash efforts to tax the wealthy.
Sen. Nguyen, for his part, is already looking ahead to broader changes to the tax system.
“I don’t want people to think taxing cap gains is in itself a victory. This is the tip of the spear,” said Nguyen.
“Don’t let anybody think this is it. This is kind of their distraction. This is kinda like they’re throwing a bone at us. It’s like ‘cool, we’re giving you some cap gains, now lay off.’ No, we’re coming for actual reform. This is just the first step.”