The Impact – Oct. 9th episode features a panel discussion about the initiative to repeal the state capital gains tax. Panelists: I-2109 supporter Vijay Boyapati and I-2109 opponent Dr. Stephan Blanford
Vijay Boyapati, a Seattle based software engineer and author, is a vocal supporter of Initiative 2109. According to Boyapati, says he worked at Google back in its Silicon Valley startup days and was an early shareholder in the company. When the Google decided to go public, he moved to Seattle to avoid getting hit with California’s capital gains tax.
Boyapati argues that keeping the capital gains tax could keep the next Amazon or Microsoft from making Washington its home.
“I strongly believe that Seattle’s tax policy is a very important reason, the primary reason, that our tech sector here has flourished and why so many people have come here to start businesses,” said Boyapati. “We’ve already seen the world’s wealthiest person, Jeff Bezos, leave to Florida. What would Seattle look like without Paul Allen? If Paul Allen had never come here it would be a very different city.”
He says it’s not uncommon in the tech sector to heavily supplement employee salaries with company stock, making tech workers particularly sensitive to capital gains tax impacts. Boyapati contends there’s a high chance state lawmakers will broaden the capital gains tax to impact the general public at some point noting bills have already been filed to lower the threshold for exemptions from $250,000 to $15,000.
“They’ve opened the door, they’re marketing that this is just for rich people, but they’re already trying to lower the threshold so that this applies to basically everyone,” said Boyapati. “Federal income tax started as a one percent tax on a very small handful of people. We all pay that tax. Everyone in Washington who has stocks or has assets is going to be paying this tax in a few years.”
Boyapati is skeptical of claims that critical programs couldn’t exist without the state capital gains tax and questions how effectively tax dollars are being used.
“The proponents of the capital gains tax say this is a problem of money. I really disagree with that. I think you look at the budget and how it’s grown in Washington over the last, say, 15 years. In 2010 the general fund budget was $26 billion. It’s $70 billion today. That’s a 270% increase in the last 15 years. The population of Washington has only grown 15%. We need to understand how the money is being spent and if it’s being spent efficiently, I really think it’s not being spent efficiently,” said Boyapati.
On the other side of the debate is Dr. Stephan Blanford, Executive Director of the Children’s Alliance and a representative of the No on 2109 campaign. He describes the initiative as an effort to benefit the wealthiest people in the state at the expense of schools and families that can’t afford child care. Back in 2021, the Children’s Alliance joined with other organizations to rally support for the bill that created the state capital gains tax, SB 5096.
“This is a tax break for millionaires and billionaires in Washington state at the cost of low income people and middle income people and their children,” said Blanford.
“This law was put into place to make investments in child care, which is seen as an absolute essential both for the children who get access to high quality child care and are later on successful in K-12 and later on in life.”
According to Blanford, state capital gains tax revenue has created new child care opportunities for lower income families in every county in the state.
“For example, in Adams County, and as a result of this tax, there are fifty nine kids who are in child care right now, that would not be in child care as a result of the tax,” said Blanford.
He declined to weigh in on whether or not the legislature will modify the quarter-million dollar exemption threshold to apply state capital gains tax to more taxpayers.
“What we’re talking about is on the ballot, the language has already been produced. And what is very clear is that what’s on the ballot is an initiative to get rid of the capital gains tax. I’m not going to argue because I do not know what the plans are. I think Vijay is using a play from the playbook that Tim Eyman uses, which is to look at a law or a policy that is in place and extrapolate all these terrible outcomes. The voters of Washington state have that capital gains tax in front of them. 0.2% of Washingtonians actually have to pay that tax,” said Blanford.
Blanford disputes the claim that the capital gains tax will lead to an exodus of workers with valuable stock portfolios.
“There are ample studies out there that show that that is not the case. As a matter of fact, there was one study that came out recently that says for most workers, who are most people who can afford to move to other places, only 2.4% of them actually leave. There are only eight states in the union that actually don’t have a capital gains tax,” said Blanford.
Watch the rest of the twenty-two minute exchange here: https://tvw.org/video/the-impact-for-or-against-capital-gains-tax-repeal-i-2109-2024101013/.