AGC fights capital-gains tax proposal

AGC fights capital-gains tax proposal

A hearing on legislation to impose a nine-percent capital-gains tax was held last week. Former AGC President Jake Jacobson (Osborne Construction) joined AGC Chief Lobbyist Jerry VanderWood in testifying against the measure.

“This measure is ill-conceived,” Jacobson told the Senate Ways and Means Committee.  “Many people have planned for retirement not in conventional IRAs or 401Ks but through investments in publicly held companies or privately held ones such as small businesses.  This bill would adversely affect them, many of whom are not wealthy.”

The bill, which was requested by Governor Inslee, would set a tax of nine percent on the sale or voluntary transfer of long-term assets. For individuals filing single returns, the first $25,000 in long-term capital gains is excluded from the tax. For individuals filing joint returns, the first $50,000 is excluded from the tax. There are some exclusions, such as residential dwellings along with the land upon which the dwelling is located, and assets held in a retirement account.

“The construction industry and the good paying jobs it provides are spurred in large measure by capital investments,” VanderWood testified. “Capital-gains taxes negatively impact the available stock of capital. Capital-gains taxes reduce the return that entrepreneurs and investors receive from the sale of a business. This diminishes the reward for entrepreneurial risk-taking and reduces the number of entrepreneurs and the investors that support them. The result is lower levels of economic growth and job creation.”

Many opponents of the measure pointed out that a capital-gains tax is considered – by the IRS and other states that have the tax – an income tax and, therefore, unconstitutional in Washington.  The Governor and proponents believe it is constitutional, and in any event are willing for the matter to be decided by the state Supreme Court should it become law.

It is unclear whether proponents have the votes to pass the measure.

For more information, contact AGC Chief Lobbyist Jerry VanderWood, 360-352-5000.

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