Insightful legislative capital gains income tax public records


On March 30 I sent the legislature a public records request for documents “discussing whether to add/remove an emergency clause, referendum clause, or the language ‘support of state government’ for Senate Bill 5096/House Bill 1496 (capital gains).” I’ve received several interesting records including the odd argument that farmers can afford to pay the new tax because they work “less than half time.” Today I received a copy of March 26 memo from former House Speaker Frank Chopp titled “Capital gains options.”

Five potential strategies were examined with pro/cons listed: 1) Pass Senate bill and trailer real estate fix bill; 2) Send House bill over with emergency clause; 3) Send House bill over with referendum; 4) Send House bill over without referendum or emergency clause; and 5) Do nothing.

Ultimately the House decided to add a referendum-denying stealth emergency clause to the capital gains income tax bill (SB 5096) and the Senate agreed.

Here are a couple of the interesting pros/cons from the various strategies Rep. Chopp highlighted in his memo:

  • “Avoid a referendum fight, leaving opponents the tougher initiative & court challenge paths”
  • “Members take CG vote in advance of a, likely, difficult 2022 election in new districts”
  • “Attacked for raising taxes while state is ‘awash with money’”
  • “Attacked for declaring ‘raising taxes’ an emergency”
  • “Preserve opportunity for future CG passage by not failing at the ballot under current conditions where Allies/Caucuses are not aligned”

The new capital gains income tax is now subject to litigation for being unconstitutional with a court hearing scheduled for August 18. Additional legislative public records are due on August 27.

Additional Information
Rep. Chopp March 26 capital gains income tax memo

Sign up for the WPC Newsletter