Will Senate have to vote again on income tax bill (SB 5096)?


During last Saturday’s Senate floor debate before the 25-24 passage of the income tax on capital gains (SB 5096), there was discussion about allowing voters to run a referendum on the new proposed tax. An amendment by Sen. Hobbs was adopted that directly removed the emergency clause and language from the intent section claiming the bill was necessary for the support of state government. Another amendment by Sen. Brown would have placed the measure directly on the ballot, but Sen. Robinson, sponsor of SB 5096, said that was unnecessary since the voters could run a referendum if they wanted.

Now there are whispers that the House may add the emergency clause back to the bill forcing the Senate to vote on it again. Would there still be 25 votes in support in the Senate if the voters are denied the opportunity to run a referendum?

Here is what we know about the timeline for the new income tax on capital gains proposed by SB 5096: 1) The new income tax wouldn’t take effect until January 1, 2022; and 2) The new tax wouldn’t be first collected until April 2023 when taxpayers file their federal income tax returns.

It is because of this two-year delay in the collection of revenue from the new income tax that Sen. Hobbs said on the floor (1:43):

“I actually do believe there are times when you need emergency clause, but in this case Mr President, this act actually does not take effect for another two years. So really not an emergency.”

A majority of the Senate agreed and adopted this amendment from Sen. Hobbs:

“Removes the emergency clause. Removes language from the intent section specifying that the tax is necessary for the support of state government and its existing institutions.”

Later in the floor debate, Sen. Brown proposed an amendment to proactively place SB 5096 on the ballot for voters to consider. Sen. Brown noted that voters have already rejected income taxes 10 straight times and should be asked directly if they’ve now changed their minds.

 Here was the effect statement of her amendment:

“Adds a referendum clause and a new section listing prior resolutions to impose an income tax.”

Sen. Robinson, sponsor of SB 5096, spoke against the amendment saying (2:06:39):

“With the adoption of an earlier amendment the people are free to seek a referendum on this bill as they choose. I do not think this amendment is necessary. If our citizens want to put this to a referendum, they I'm sure will make that happen so asking for a no vote.”

It is clear from the floor debate that the intent of the Senate is to allow citizens to have the opportunity to run a referendum on SB 5096. We’ll see if the House disagrees with that and instead plans to test the strength of the 25-24 vote by making the Senate consider the bill again.

SB 5096 has currently been referred to the House Finance Committee for further action.

Additional Information
Income tax on capital gains passes Senate in 25-24 Saturday vote
Editorial coverage of capital gains income tax proposals
WA Capital Gains Income Tax Proposal: What You Need to Know!
A Capital Gains Tax IS an Income Tax: Irrefutable Proof in About Two Minutes (short video)
BAD POLICY: An Income Tax on Capital Gains for Washington (short video)

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