Washington Initiative 2109, Repeal Capital Gains Tax Initiative (2024)

Washington I-2109
Election date November 5, 2024
Topic Taxes
Status d Defeated
Type State statute	Origin Citizens

Washington Initiative 2109, the Repeal Capital Gains Tax Initiative, was on the ballot in Washington as an Initiative to the Legislature, a type of indirect initiated state statute, on November 5, 2024. It was defeated.

A "yes" vote supported repealing the capital gains excise tax imposed on long-term capital assets by individuals with capital gains over $250,000.

A "no" vote opposed repealing the capital gains excise tax imposed on long-term capital assets by individuals with capital gains over $250,000.

Election results

Washington Initiative 2109
Result		Votes	Percentage
Yes		1,364,510	35.89%
No		2,437,419	64.11%

Results are officially certified.

Source

Overview

What would Initiative 2109 have done?

See also: Text of measure

This initiative would have repealed the 7% capital gains excise tax imposed on sales and exchanges of long-term capital assets by individuals with capital gains over $250,000. Examples of sales that would have been subject to the tax included stocks, bonds, business interests, or other investments and tangible assets.

The Washington State Legislature passed legislation creating the capital gains tax in 2021. It took effect on January 1, 2022, with the first payments due on April 18, 2023. Revenue from the tax was set to be deposited in the education legacy trust account and the common school construction account.

As of 2024, the following sales were exempt from the capital gains tax in Washington:

• real estate;
• assets in certain retirement accounts;
• interests in privately held entities when the capital gain or loss is attributable to real estate owned by the entity;
• assets sold under the imminent threat of condemnation;
• assets used in a business that are depreciable or qualify for being expensed;
• timber, timberlands, and dividends from real estate investment trusts from timber or timberlands;
• commercial fishing privileges and
• goodwill from the sale of a franchised auto dealership.

In 2023, the Washington State Supreme Court ruled that the capital gains tax was an excise tax and did not violate the constitutional prohibition on income taxes.

What did supporters and opponents say about the measure?

See also: Support and Opposition

Initiative sponsor State Rep. Jim Walsh (R) said, "Washington has a long tradition, both legal and cultural, of prohibiting a state income tax. This tradition reflects the common-sense principle that a state tax on capital gains is a type of state income tax. ... Every other state that has a capital gains tax considers it an income tax. The federal government considers the capital gains tax an income tax. Our state Supreme Court wrote an eccentric opinion saying otherwise and the US Supreme Court said the people of WA must fix that mess ourselves. With I-2109, the people are fixing it. Critics may lazily — and falsely — argue that I-2109 benefits only a few ‘rich’ people. However, the truth is that it benefits everyone in Washington. Our state’s economic and technological growth hub status has been attributed to the absence of a capital gains income tax, fostering job creation and generating tens of billions of dollars in wealth. It’s a shame to discard that advantage. I-2109 aims to restore it, protecting our competitive edge."

Invest in WA Now, which opposed the initiative, said it would "[take] more than $5 billion from child care and education over the next 6 years. This initiative is bankrolled by a mega-millionaire trying to buy himself a tax break – by taking $900 million a year from students, child care providers, schools, and more. We can’t let that happen. Washingtonians support the capital gains tax to fund education. The capital gains tax is just on Wall Street stock profits larger than $250,000. Only 4,000 people paid the tax last year, but that sent nearly $900 million to expand childcare, provide more early learning, and repair our schools."

How did this initiative get on the ballot?

See also: Path to the ballot and Let's Go Washington 2024 initiatives

Let's Go Washington, led by State Rep. Jim Walsh (R-19) and conservative donor Brian Heywood, sponsored six Initiatives to the Legislature. The Democratic-controlled state legislature enacted three of the initiatives into law. Legislative Republicans were unanimous in their support for the three initiatives, while Democrats were divided. The legislature took no action on the other three initiatives, so they were placed on the 2024 ballot for voter approval or rejection.

From 1912, when the state’s initiative process was established, to 2023, six Initiatives to the Legislature (ITLs) received legislative approval. With three approved in 2024, the total increased to nine, a 50% increase.

Text of measure

Ballot title

The ballot title for the initiative is below:

“

Initiative Measure No. 2109 concerns taxes. This measure would repeal an excise tax imposed on the sale or exchange of certain long-term capital assets by individuals who have annual capital gains of over $250,000. This measure would decrease funding for K-12 education, higher education, school construction, early learning, and childcare Should this measure be enacted into law? Yes [ ] No [ ]

”

Ballot summary

The ballot summary for the initiative is below:

“

This measure would repeal an excise tax imposed on the sale or exchange of certain long-term capital assets by individuals who have annual capital gains of over $250,000.

”

Full text

The full text of the measure can be read below.

Readability score

See also: Ballot measure readability scores, 2024

Using the Flesch-Kincaid Grade Level (FKGL) and Flesch Reading Ease (FRE) formulas, Ballotpedia scored the readability of the ballot title and summary for this measure. Readability scores are designed to indicate the reading difficulty of text. The Flesch-Kincaid formulas account for the number of words, syllables, and sentences in a text; they do not account for the difficulty of the ideas in the text. The attorney general wrote the ballot language for this measure.

The FKGL for the ballot title is grade level 9, and the FRE is 48. The word count for the ballot title is 58.

The FKGL for the ballot summary is grade level 15, and the FRE is 36. The word count for the ballot summary is 28.

Support

Let's Go Washington sponsored the initiative, including five others targeting the 2024 ballot.

Supporters

Officials

• State Rep. Jim Walsh (R)

Organizations

• Let's Go Washington

Individuals

• Brian Heywood - Founder of Let's Go Washington

Arguments

• State Sen. Lynda Wilson (R-17): "There’s plenty of money in the budget. It’s all about how you prioritize."
• Washington House Republicans: "This initiative would repeal the state’s capital gains income tax. House Republicans oppose the capital gains income tax because it is: A major step toward a new state income tax. Unnecessary. State tax collections are strong and state lawmakers enough revenue to pay for state priorities. Unpopular. Washington voters have told us several times that they do not want any form of a new state income tax. Unstable. This type of tax is volatile, especially in economic downturns. Unconstitutional. Unfortunately, the state Supreme Court disagreed in a controversial decision. Makes our state less competitive. The absence of a capital gain income tax contributed to economic growth in our state – particularly in the technology sector."
• State Rep. Jim Walsh (R-19): "Washington has a long tradition, both legal and cultural, of prohibiting a state income tax. This tradition reflects the common-sense principle that a state tax on capital gains is a type of state income tax. The enthusiastic support that the people of Washington have given Initiative 2109, which repeals the state’s recently passed capital gains tax, reflects both this tradition and principle. Every other state that has a capital gains tax considers it an income tax. The federal government considers the capital gains tax an income tax. Our state Supreme Court wrote an eccentric opinion saying otherwise and the US Supreme Court said the people of WA must fix that mess ourselves. With I-2109, the people are fixing it. Critics may lazily — and falsely — argue that I-2109 benefits only a few ‘rich’ people. However, the truth is that it benefits everyone in Washington. Our state’s economic and technological growth hub status has been attributed to the absence of a capital gains income tax, fostering job creation and generating tens of billions of dollars in wealth. It’s a shame to discard that advantage. I-2109 aims to restore it, protecting our competitive edge."
• State Rep. Ed Orcutt (R-18): "By repealing this controversial tax, which many see as a step toward a state income tax, we will help our economy grow and create more jobs in the future. The Legislature should repeal this tax this legislative session."

Opposition

No on 2109 led the campaign in opposition to the initiative.

Opponents

Organizations

• Civic Ventures
• Invest in Washington Now
• League of Women Voters of Washington
• Moms Rising Together
• Permanent Defense
• Washington Progress Fund

Arguments

• Treasure Mackley, executive director of Invest In WA Now: "We will not allow a mega-millionaire to grab this money from Washington’s kids just to enrich his wealthy friends.”
• Invest in WA Now: "Conservative mega-donors sent I-2109 to the legislature, hoping lawmakers would repeal the capital gains tax – taking more than $5 billion from child care and education over the next 6 years. This initiative is bankrolled by a mega-millionaire trying to buy himself a tax break – by taking $900 million a year from students, child care providers, schools, and more. We can’t let that happen. Washingtonians support the capital gains tax to fund education. The capital gains tax is just on Wall Street stock profits larger than $250,000. Only 4,000 people paid the tax last year, but that sent nearly $900 million to expand childcare, provide more early learning, and repair our schools."
• No on 2109: "I-2109 repeals a state extraordinary profits tax (capital gains) that does not apply to 99.8% of us. This initiative benefits just a few people - less than 4,000 - who make millions in profits off of stock sales. Giving mega-millionaires, and billionaires, a tax cut will shift more tax pressure on the rest of us."
• Defend Washington: "There are a lot of misleading initiatives on the ballot this year… and all of them were put there by this guy, a millionaire hedge fund manager who moved here from California. What do the initiatives do? [They] make critical cuts to education and healthcare programs and put our air and water at risk just to give tax breaks to super rich guys like him. So that’s deep cuts for us, and tax cuts for him and his friends. Don’t let some hedge fund millionaire control our future. Vote NO on all the statewide initiatives on your ballot."
• State Sen. June Robinson (D-38): "If it’s repealed, it is a big hole in the budget. We’re going to have to come back next year and deal with that reality."

Media editorials

See also: 2024 ballot measure media endorsements

Support

Ballotpedia did not identify any media editorials in support of Initiative 2109. If you are aware of one, please send an email with a link to editor@ballotpedia.org.

Opposition

• The Columbian Editorial Board: "In 2023, the capital gains tax was paid by fewer than 4,000 people in Washington and generated nearly $900 million — 85 percent of it from King County residents. The Office of Financial Management estimates that repeal of the tax would reduce state revenue by $2.2 billion over five years. That money is dedicated to K-12 education, higher education, early learning and child care. In particular, it is being used to help with school construction, especially in rural and low-income districts that have difficulty getting bond measures approved."
• The Seattle Times Editorial Board: “A vote is kind of a prayer for the world we desire for ourselves and for our children.” — U.S. Sen. Raphael Warnock, D-Ga. Washington voters should reflect on those words from the gentleman from Georgia as they mark their ballots for the general election, specifically on Initiative 2109. On the Nov. 5 ballot, voters are asked whether to repeal the state’s 7% capital gains tax. The answer should be a resounding “no.”

Campaign finance

See also: Campaign finance requirements for Washington ballot measures

The campaign finance information on this page reflects the most recent scheduled reports that Ballotpedia has processed, which covered through November 30, 2024.

Let's Go Washington and Taxpayers Accountability Alliance registered to support the initiative. The committees also registered to support the two other initiatives (Initiative 2124 and 2117) on the 2024 ballot.

No on 2109 Committee, Defend Washington, and Stop Greed registered to oppose the initiative. Stop Greed also registered to oppose the two other initiatives (Initiative 2124 and 2117) on the 2024 ballot and Defend Washington registered to oppose all four 2024 initiatives.

Since the committees are registered to support or oppose multiple measures, it is impossible to distinguish between funds spent on each individual measure. When PACs contribute to other PACs, Ballotpedia subtracts the funds from the contributing PAC's finances to avoid double counting funds.

	Cash Contributions	In-Kind Contributions	Total Contributions	Cash Expenditures	Total Expenditures
Support	$16,072,340.11	$1,368,649.57	$17,440,989.68	$13,795,447.01	$15,164,096.58
Oppose	$8,499,654.27	$1,228,457.37	$9,728,111.64	$8,507,082.16	$9,735,539.53
Total	$24,571,994.38	$2,597,106.94	$27,169,101.32	$22,302,529.17	$24,899,636.11

Support

The following table includes contribution and expenditure totals for the committees in support of Initiative 2109.

Committees in support of Initiative 2109
Committee	Cash Contributions	In-Kind Contributions	Total Contributions	Cash Expenditures	Total Expenditures
Let's Go Washington	$16,071,240.11	$1,367,857.73	$17,439,097.84	$13,752,922.21	$15,120,779.94
Taxpayers Accountability Alliance	$1,100.00	$791.84	$1,891.84	$42,524.80	$43,316.64
Total	$16,072,340.11	$1,368,649.57	$17,440,989.68	$13,795,447.01	$15,164,096.58

Donors

Donors to the support campaigns were as follows:

Donor	Cash Contributions	In-Kind Contributions	Total Contributions
Brian Heywood	$5,176,000.00	$1,231,347.40	$6,407,347.40
BIAW Member Services Corporation	$500,000.00	$0.00	$500,000.00
Lawrence Hughes	$400,000.00	$0.00	$400,000.00
Kemper Holdings, LLC	$350,000.00	$0.00	$350,000.00
Phil Scott	$250,000.00	$0.00	$250,000.00

Opposition

The following table includes contribution and expenditure totals for the committees in opposition to Initiative 2109.

Committees in opposition to Initiative 2109
Committee	Cash Contributions	In-Kind Contributions	Total Contributions	Cash Expenditures	Total Expenditures
Defend Washington	$5,219,744.00	$572,028.93	$5,791,772.93	$5,241,042.31	$5,813,071.24
No on 2109 Committee	$3,267,282.27	$655,825.28	$3,923,107.55	$3,253,918.33	$3,909,743.61
Stop Greed	$12,628.00	$603.16	$13,231.16	$12,121.52	$12,724.68
Total	$8,499,654.27	$1,228,457.37	$9,728,111.64	$8,507,082.16	$9,735,539.53

Donors

Donors to the opposition campaigns were as follows:

Donor	Cash Contributions	In-Kind Contributions	Total Contributions
SEIU 775 Ballot Fund	$1,000,000.00	$0.00	$1,000,000.00
Washington Education Association	$374,000.00	$133,473.09	$507,473.09
National Education Association	$500,000.00	$0.00	$500,000.00
Nicolas Hanauer	$500,000.00	$0.00	$500,000.00
Washington Federation of State Employees	$500,000.00	$0.00	$500,000.00
SEIU Initiative Fund	$425,000.00	$0.00	$425,000.00
Invest in Washington Now	$95,000.00	$269,295.99	$364,295.99

Methodology

To read Ballotpedia's methodology for covering ballot measure campaign finance information, click here.

Polls

See also: 2024 ballot measure polls

Are you aware of a poll on this ballot measure that should be included below? You can share ballot measure polls, along with source links, with us at editor@ballotpedia.org.

Washington Initiative 2109, Repeal Capital Gains Tax Initiative (2024)
Poll	Dates	Sample size	Margin of error	Support	Oppose	Undecided

Cascade PBS/Elway Poll	10/8/2024-10/12/2024	401 LV	± 5%	29%	56%	15%
	Question: "Initiative 2109 concerns taxes. This measure would repeal an excise tax imposed on the sale or exchange of certain long-term capital assets by individuals who have annual capital gains of over $250,000. This measure would decrease funding for K-12 education, higher education, school construction, early learning, and childcare. As things stand today, do you intend to vote Yes to repeal the capital gains tax, No to keep the capital gains tax, or UNDECIDED?"

Cascade PBS/Elway Poll	9/3/2024-9/6/2024	403 RV	± 5%	30%	52%	18%
	Question: "Initiative 2109 concerns taxes. This measure would repeal an excise tax imposed on the sale or exchange of certain long-term capital assets by individuals who have annual capital gains of over $250,000. This measure would decrease funding for K-12 education, higher education, school construction, early learning, and childcare. As things stand today, how are you inclined to vote?"

Cascade PBS/Elway Poll	5/13/2024-5/16/2024	403 RV	± 5%	47%	36%	17%
	Question: "Initiative 2019 concerns the state’s new capital gains tax. If passed, it would repeal an excise tax imposed on the sale or exchange of certain long-term capital assets by individuals who have annual capital gains of over $250,000. As things stand today, how are you inclined to vote?"

Crosscut Elway	12/26/2023-12/28/2023	403 RV	± 5%	57%	29%	15%
	Question: "The following are some proposals that the legislature is expected to discuss in the coming weeks. As I read each of these items, please indicate whether you Favor, Strongly Favor, Oppose or Strongly oppose each one. ... Repeal the state’s new capital gains tax."

Note: LV is likely voters, RV is registered voters, and EV is eligible voters.

Background

Washington prohibition on income tax

Washington does not have a personal or corporate income tax.

Under Article VII of the Washington Constitution, which was adopted by voters in 1930, all taxes must be uniform within the same class of property and property includes "everything, whether tangible or intangible, subject to ownership."

In 1932, voters approved an initiative, known as Initiative 69, which was designed to create a graduated income tax for education funding. The Washington State Supreme Court, in landmark decision Culliton v. Chase, overturned the initiative as unconstitutional, finding that it violated the constitution's prohibition on graduated income taxes.

Washington capital gains tax (2021)

A capital gains tax was passed by the Washington State Legislature in 2021. Senate Bill 5096 was approved along partisan lines with Democrats in favor and Republicans opposed. It took effect on January 1, 2022, with the first payments coming due on April 18, 2023.

A capital gains tax is a tax on profits from the sale of investments. Sales subject to the tax in Washington include sales of stocks, bonds, business interests, or other investments and tangible assets.

In 2023, which is the first year that the tax was collected, the tax generated $890 million in revenue. Revenue from the capital gains tax is deposited in the Education Legacy Trust account, created in 2005, which is used for K-12 and higher education funding and early learning and childcare programs.

The following sales are exempted from the capital gains tax:

• real estate;
• assets in certain retirement accounts;
• interests in privately held entities when the capital gain or loss is attributable to real estate owned by the entity;
• assets sold under the imminent threat of condemnation;
• assets used in a business that are depreciable or qualify for being expensed;
• timber, timberlands, and dividends from real estate investment trusts from timber or timberlands;
• commercial fishing privileges and
• goodwill from the sale of a franchised auto dealership.

Quinn v. Washington

Chris Quinn and other Washington residents filed a lawsuit challenging the constitutionality of the capital gains tax, arguing that it was an unconstitutional income tax rather than an excise tax. Washington does not have an individual or corporate income tax. Plaintiffs argued that if the tax was found to be an excise tax, then it violates the U.S. Constitution's dormant commerce clause. In March 2022, the Douglas County Superior Court ruled that the capital gains excise tax was unconstitutional. The state appealed the ruling to the Washington Supreme Court, which ruled 7-2 to reverse the lower court's ruling and upheld the tax as a constitutional excise tax on March 24, 2023. The state supreme court found that "The capital gains tax is appropriately characterized as an excise [tax] because it is levied on the sale or exchange of capital assets, not on capital assets or gains themselves.”

Capital gains tax rates by state

Washington is one of 42 states that tax capital gains. Eight states do not tax capital gains. In the 42 states that tax capital gains, the rate ranges from 2.50% in Arizona to 13.3% in California.

See also

2024 measures

• 2024 ballot measures
• Taxes on the ballot
• 2024 petition deadlines

Washington

• Washington ballot measures
• Washington initiative laws

News and analysis

• Ballot measure lawsuits
• Ballot measure readability
• Ballot measure polls
• Ballot measure signature costs

External links

• Initiatives to the Legislature
• Initiative 2109 full text