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nanobitegamer t1_jdk62so wrote

Can someone explain this to me like im a child, please?

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rosesandpiglets t1_jdk843k wrote

The state constitution prohibits an income tax, the supreme court was deciding if taxes on capital gains (like selling stock) count as income tax

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MetallicGray t1_jdlq9ad wrote

That’s interesting. Aside from where you stand, I don’t see how selling capital gains is not an income. Investments sole purpose is to generate more money off your money… so how is money generated not considered income.

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UncommonSense12345 t1_jdlyjyw wrote

Every tax group/gov in the world says capital gains are income….. WA state basically just bucked common sense so they could ram through this tax. Much like how they ignore the Bruen decision on their gun laws….. WA state has been 1 party run so long there are 0 checks and balances on what the gov can do…. People keep voting for the dems tho so what can you do ….

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[deleted] t1_jdm32k4 wrote

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[deleted] t1_jdmipf2 wrote

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[deleted] t1_jdn3nmn wrote

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[deleted] t1_jdn9gwj wrote

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wyecoyote2 t1_jdnab3c wrote

>the GOP has held the state senate in the last 10 years

Oops, this doesn't say decade does it.

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[deleted] t1_jdnax4e wrote

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[deleted] t1_jdnbii9 wrote

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rosesandpiglets t1_jdnbx5o wrote

Thanks for confirming you don’t know what “in” means

Again, I said they controlled the state senate IN the last 10 years.

Have a nice life

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FireAntHoneyBadger t1_jdnu0mi wrote

Exactly. This is a twisted ruling based on politics, not the state constitution.

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CraftyFellow_ t1_jdsevbt wrote

So you be okay with taxing capital gains at the same rates as income federally? You know since obviously capital gains are income.

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MetallicGray t1_jdt8ise wrote

Um. Yes? Seems pretty obvious and consistent with my statement.

Also short term capital gains tax is the same rate as federal income tax rates.

I’m guessing it’s the long term rates your thinking of.

Idk why you worded that comment like it was some kind of gotcha lol

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Unique_Engineering_3 t1_jdkch29 wrote

If you’re making more than $250k/yr in capital gains I’m sure your accountant and lawyer have already explained your potential liability here.

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wyecoyote2 t1_jdmitq9 wrote

I'm sure if you are making that a year on the sale of stock. You will simply take a loan on the stock and not pay a tax.

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Unique_Engineering_3 t1_jdmjd8x wrote

Right?! Their accountants and lawyers will point out plenty of legal ways to help their clients lower or avoid the additional tax liability. It’s not like people with $250k/yr in capital gains don’t have resources for specialized assistance.

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JackAlexanderTR t1_jdvlkcb wrote

Yes if you make that much every year. But for people who that might be a one in a lifetime deal, or once every few years at best, they can't afford the big boy tricks. And so it will hit the most those who can afford it the least. As always.

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wyecoyote2 t1_jdw4n4i wrote

Absolutely true. Who else was this made for. Not to mention now all income can be considered an excise tax.

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mjarrett t1_jdkczvo wrote

<oversimplification>

Due to a quirk of Washington's constitution, we can't charge income tax. So we tax in a bunch of other ways that mostly punishes poor people, while constantly getting in trouble for not paying for our schools.

Some clever politicians found a way to tax rich people on their stonks, by not calling it an income tax. This argument is mostly gibberish, but because believing it means taxing a bunch of local tech executives, people are playing along

The state supreme court, being people, also agreed. Now the State can start sending out bills to about 7000 rich people.

</oversimplification>

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etcpt t1_jdkjv3v wrote

>Due to a quirk of Washington's constitution, we can't charge income tax.

More precisely, there is case law from 1933 (Culliton v. Chase) in which the State Supreme Court held that income is property and thus can only be taxed at a flat 1%. There is an argument that the court got it wrong in Culliton by misunderstanding the prior holding in Aberdeen Savings & Loan Assoc. v. Chase from 1930, as laid out here. If that argument holds water, legislative or initiative action to instate an income tax may prevail.

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OdieHush t1_jdl7tq5 wrote

Can’t wait for the initiative to fail spectacularly and then for the legislature to pass it anyway.

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FireAntHoneyBadger t1_jdnu5bo wrote

>Due to a quirk of Washington's constitution

It's not a quirk. It's an intentional part of the constitution.

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nanobitegamer t1_je2h6f1 wrote

So it's a very good thing then? I could've sworn I saw a good amount of people complaining about this like it's bad

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mjarrett t1_je2whn2 wrote

There's room for rational debate on either side, but I think the evidence points pretty broadly to this being good so far.

I've generally seen two complaints:

a) Taxing the rich is bad. If we leave the rich all of their money, they will use it to generate a better economy for everyone. If we tax the rich, they'll move themselves and/or their money away.

Trickle-down economics is pretty much bull****. The fraction of the profits going into the working class jobs versus into billionaires' literal rocket ships are exceedingly small and shrinking. The threats of capitalists leaving Washington are real, but widely overblown.

b) A $250,000 threshold this year will become $2500 next year, and next we basically have State income taxes like all those other shmucks.

Given the assumption that income taxes (favor the poor) are better than sales taxes (favor the rich), I'd rather tax money come from income taxes. But the risk comes down to the government saying "Why not do both?", and wasting the money on stupid stuff. It's Washington, so it could happen.

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Old-AF t1_jdk8bp6 wrote

It’s a tax on rich people that will raise $500M a year to help fund schools and social programs for poor people.

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wyecoyote2 t1_jdmjai6 wrote

So it will join the lottery money, the alcohol and tobacco taxes, the Marijuana taxes all for the schools. Man the schools must be so well provided for there is no shortage of money with all the taxes going to the schools.

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d3ming t1_jdlj30y wrote

So far no one on this thread actually explained how this tax works. ie in what case would I be taxed due to this vs how it was before?

Edit: answering my own q after some research - cap gains over 250k would be taxed at 7%. examples:

  1. 249k of gains would have no tax
  2. 250100 would have 7 dollar of tax (7% of 100 which is over the 250k limit)
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ew73 t1_jdlkzuy wrote

Capital Gains taxes are pretty simple.

Capital gains is just a fancy way to say "profit" when you're talking about stocks. It's the amount that some asset increases since you bought it. It's only calculated when you sell the asset. So if you buy something for $10, and sell it for $100, your "capital gains" is $90.

The Washington law taxes capital gains, but only amounts over $250,000, at 7%.

The Washington Supreme Court decdied that the capital gains tax law as an "excise tax".

An excise tax is one that is often levied on some some good, or activity. Cigarettes and alcohol are often subject to additional excise taxes, for example. Gasoline is another common item subject to excise taxes.

So, along with cigarettes, gasoline, alcohol, and some other things, capital gains are also subject to an excise tax.

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Top-Cantaloupe-917 t1_jeaam29 wrote

The WA constitution prohibits an income tax above 1%… capital gains have always considered income but the court wanted the tax to go through so they just decided to call it an excise tax instead. Basically if the constitution outlaws doing something just do that thing but call it something else and your good to go as long as the court agrees with the policy your trying to enact.

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