2967 would be effective January 1, 2019 and declares an intent to ask the state’s citizens to reduce the state property tax levy and replace it with the capital gains excise tax.
Part I: Capital Gains Tax
2967 establishes a tax imposed on all individuals for the privilege of selling or exchanging long-term capital assets or receiving Washington capital gains. The tax equals 7% multiplied by the individual’s Washington capital gains. The tax applies to the sale/exchange of long-term capital assets owned by the taxpayer or Washington capital gains otherwise realized by the taxpayer.
The provisions do not apply to the sale or exchange of: any residential dwelling along with the land upon which the dwelling is located; assets held under a retirement savings account; assets pursuant to or under imminent threat of condemnation proceedings by the United States; carrel, horses, or breeding livestock held for more than 12 months if for the taxable year of the sale or exchange, more than 50% of the taxpayer’s gross income for the taxable year, including from the sale or exchange of capital assets is from farming or ranching; agricultural land by an individual who has regular, continuous, and substantial involvement in the operation of the agriculture that meets certain criteria; property used in a trade or business if the property qualifies for an income tax deduction; timber, timberland, or the receipt of Washington capital gains as dividends and distributions from real estate investment trusts derived from gains from the sale or exchange of timber.
Part II: Use of Tax Revenue
The bill specifies dates by which the Department Of Revenue must calculate the revenue collected during the most recently completed fiscal year from the tax; estimate the amount needed to fund the senior citizen property tax exemption; calculate the amount of revenue remaining for the tax after deducting the amount determined to be needed to fund the senior citizen property tax exemption; and reduce the property tax rate imposed for the next succeeding calendar year.
Part III: Property Tax Relief
The legislature intends to provide tax relief to senior citizens, disabled persons, and veterans. Income threshold levels in this section are defined,