Stronger Families. Stronger Communities. Stronger Washington

Governor Jay Inslee recently proposed a $54.4 billion 2019-2020 budget that increases spending by 20 percent and increases taxes $3.7 billion. I am a small business owner, and like many small business owners, I am opposed to the governor’s massive “tax and spend” proposal and the tax increases being proposed by the Democrats in the State House and State Senate. The state of Washington is experiencing historic levels of unanticipated revenue from existing sources. There is no need to create new taxes like the capital gains/income tax and increase the real estate excise tax and business and occupation tax.

The tax increases proposed by the governor will have a chilling effect on economic development and growth for many small and family owned businesses throughout Washington; most notably the capital gains/income tax and the B&O tax increase. As taxes increase, small businesses are stretched even thinner to make capital investments, grow and develop their workforce, and invest in their local communities.

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Centralia attorney Peter Abbarno joins Association of Washington Business’ Government Affairs Director Clay Hill to testify in opposition to Senate Bill 5129, which would increase taxes on local small businesses. (Photo: Brian Mittge/AWB)

The governor’s proposal would create a 9 percent capital gains tax on earnings over $25,000 for individuals and $50,000 for households. The proceeds from retirement savings accounts would be exempt from the new tax. The sale of a business would not be exempt under the current proposal. As many small business owners would agree, they created, built, and grew their business as an essential part of their retirement. And, extra 9 percent tax (on top of the federal tax) could be devastating.

Many, including myself, believe the capital gains tax is a form of income tax. According to Article VII of the Washington state Constitution “all taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax and shall be levied and collected for public purposes only.” Therefore, it is unconstitutional to impose an income tax in the state of Washington. A 1930’s state supreme court case also struck down the idea of creating an income tax and the voters in Washington have repeatedly voted against a graduated income tax.

Read more in the Daily Chronicle.

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