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It's only 7% and for gains above $250K. I shouldn't be, but I'm shocked they had to defend this initiative. For contrast, in Canada, capital gains tax rate is

It's only 7% and for gains above $250K. I shouldn't be, but I'm shocked they had to defend this initiative. For contrast, in Canada, capital gains tax rate is 50%, regardless of the amount.

shaftoe 3y ago
This must be why I've known several people who emigrated out of Canada before having a liquidity event.
perennate 3y ago
> capital gains tax rate is 50% That makes it sound like you pay half of capital gains in taxes, but I think what you mean is that 50% of capital gains is taxable, and that this portion is taxed at the same rate as other personal income. Personally I think 100% of capital gains should be taxable at the marginal income tax rate.
- matheist 3y ago
  Yep. I was also astonished at that figure and immediately looked it up, and what you describe matches what I found.
seattlematt 3y ago
It's because the Washington state constitution prohibits a state income tax. The state Supreme Court somehow found a way to interpret the capital gains tax as an excise tax rather than an income tax.
- jandrewrogers 3y ago
  This is incorrect, income taxes are perfectly legal in Washington. However, the state constitution requires them to be flat. The desire to selectively target political out-groups with punitive income taxes has made this problematic in that state. Several states in the US, both blue and red, have flat income taxes. Washington can easily and legally implement one too, the lack of an income tax is a political choice by the Democrats. Another important aspect is that an overwhelming majority of the people in Washington -- a very blue state -- don't trust the State government with unfettered access to income tax revenue because of how poorly existing tax revenue has been managed. Washington tax revenues are not low compared to other states.
- IntelMiner 3y ago
  Seems reasonable? An excise is for a "manufactured good" (stocks) rather than direct "money" (income)
putlake 3y ago
This is false. In Canada, 50% of your capital gains are considered tax-free and 50% of the gain is taxable. The tax rate on that 50% is whatever your marginal tax rate is. So if you have capital gains of $100,000 in one year, you don't pay any taxes on $50,000 at all. For the remaining $50,000 the tax you pay is [ 15% / 20.5% / 26% / 29% / 33% ] depending upon which bracket you're in.
- hackernewds 3y ago
  that seems a lot more reasonable than taxation in California
- jandrewrogers 3y ago
  That is a lower effective rate than the US capital gains tax.
rizwank 3y ago
There is also a federal capital gains tax.
hackernewds 3y ago
And guess who this will target and affect? Middle class and upper middle class, while the wealthy still end up paying $0 through tax loops. Tax the billionaires even 10% their due first would have more impact
- spywaregorilla 3y ago
  If you're pulling in gains above 250k you're probably not middle class.

It's only 7% and for gains above $250K. I shouldn't be, but I'm shocked they had to defend this initiative. For contrast, in Canada, capital gains tax rate is 50%, regardless of the amount.

shaftoe 3y ago

This must be why I've known several people who emigrated out of Canada before having a liquidity event.

perennate 3y ago

> capital gains tax rate is 50% That makes it sound like you pay half of capital gains in taxes, but I think what you mean is that 50% of capital gains is taxable, and that this portion is taxed at the same rate as other personal income. Personally I think 100% of capital gains should be taxable at the marginal income tax rate.

matheist 3y ago
Yep. I was also astonished at that figure and immediately looked it up, and what you describe matches what I found.

seattlematt 3y ago

It's because the Washington state constitution prohibits a state income tax. The state Supreme Court somehow found a way to interpret the capital gains tax as an excise tax rather than an income tax.

jandrewrogers 3y ago
This is incorrect, income taxes are perfectly legal in Washington. However, the state constitution requires them to be flat. The desire to selectively target political out-groups with punitive income taxes has made this problematic in that state. Several states in the US, both blue and red, have flat income taxes. Washington can easily and legally implement one too, the lack of an income tax is a political choice by the Democrats. Another important aspect is that an overwhelming majority of the people in Washington -- a very blue state -- don't trust the State government with unfettered access to income tax revenue because of how poorly existing tax revenue has been managed. Washington tax revenues are not low compared to other states.
IntelMiner 3y ago
Seems reasonable? An excise is for a "manufactured good" (stocks) rather than direct "money" (income)

putlake 3y ago

This is false. In Canada, 50% of your capital gains are considered tax-free and 50% of the gain is taxable. The tax rate on that 50% is whatever your marginal tax rate is. So if you have capital gains of $100,000 in one year, you don't pay any taxes on $50,000 at all. For the remaining $50,000 the tax you pay is [ 15% / 20.5% / 26% / 29% / 33% ] depending upon which bracket you're in.

hackernewds 3y ago
that seems a lot more reasonable than taxation in California
jandrewrogers 3y ago
That is a lower effective rate than the US capital gains tax.

rizwank 3y ago

There is also a federal capital gains tax.

hackernewds 3y ago

And guess who this will target and affect? Middle class and upper middle class, while the wealthy still end up paying $0 through tax loops. Tax the billionaires even 10% their due first would have more impact

spywaregorilla 3y ago
If you're pulling in gains above 250k you're probably not middle class.