New video exposes proposed state income tax
SEATTLE—Washington Policy Center (WPC) has released a new video designed to show citizens, policymakers and media that the governor’s proposed capital gains tax currently under consideration in Olympia is not an excise tax but an income tax. The animated video utilizes WPC research to make an irrefutable case in about two minutes.
While in previous years there has been a debate as to whether a capital gains tax is an income tax, that question has now been answered by the Internal Revenue Service (IRS). In a request for clarification on the matter, Congressman Dan Newhouse wrote to the IRS and asked whether a tax on capital gains is considered an excise tax or an income tax. The IRS responded, “It is an income tax. More specifically, capital gains are treated as income under the tax code and treated as such.”
Prior to the IRS’ clarification, evidence that a capital gains tax was an income tax was already overwhelming. In 2017, WPC’s Jason Mercier contacted the state revenue (or tax) department of each state and asked how they treat capital gains income. Their answers show that every state that taxes capital gains does so via their income tax code and those that do not, identify capital gains as income.
"There is no actual debate over whether the capital gains tax is an income tax – it is,” declared Jason Mercier, WPC’s director for the Center for Government Reform. “The only question is whether those proposing this income tax will be honest about what it is. If they want an income tax, they can try to pass a constitutional amendment."