OLYMPIA – Farmer Groups advocate amending a proposal on capital gains taxation in the hope of avoiding a tax break for ranchers and retired farmers.
As proposed by Governor Jay Inslee and put into legislation by Democrats, active farmers and ranchers selling their land would be exempt from tax on gains from one-time sale of assets.
In order to qualify for the exemption, the manufacturer must have been "regularly, continuously and to a considerable extent involved in the operation" over the past 10 years.
To find out what this means, the Treasury Department would rely on a federal tax law relating to "material participation," a term the Internal Revenue Service offers as an aid to interpretation.
Washington Farm Bureau's government relations director Tom Davis said he was concerned that the state would apply the exemption in ways that would harm farmers who leased their land or were semi-retired before the sale.
"You have a job in the Treasury Department and that is to make sure everyone pays as much taxes as possible," he said on Friday.
Inslee and other Democrats who support the tax say it will affect a small number of wealthy people.
The tax would exempt capital gains of $ 200,000 for individual applicants and $ 400,000 for joint applicants. The real estate tax would be 7% and the tax on other capital gains would be 9.9%.
The Treasury Department estimates that around 7,000 taxpayers would pay a total of $ 835 million in the first year.
Taxpayers could include feedlots as the tax applies to income from the sale of cattle, horses or breeding animals that are kept for less than a year.
At a hearing on Thursday, East Washington rancher and rancher Camas Uebelacker told the House Finance Committee that the cattle would remain in their feeding ground for 220 to 240 days, making them taxable.
Even cattle kept for more than a year would be taxed if the rancher had a job off-farm that earned more money than the ranch.
"People who start ranching may have to work in town for a while," said Mark Streuli, lobbyist for the Washington Cattlemen & # 39; s Association, in an interview.
"It's an income tax for our people. And when you apply it to cattle, it's a food tax," he said.
The capital gains tax is one of Inslee's key proposals for this legislature.
The House Democrats propose that half of the proceeds go into childcare, preschools and subsidized childcare. The tax is expected to bring in around $ 1.8 billion per two-year budget cycle.
The tax was introduced in the House of Representatives of Rep. Tana Senn, a Mercer Island resident, where per capita income was $ 90,130 in 2019, according to the Census Bureau.
"I represent a district where many of my constituents will be affected by this capital gains tax. I have looked into this issue and won repeatedly," she said.
Anti-tax activist Tim Eyman said a capital gains tax will "boost" his tax-limiting initiatives.
"Voters understand that after this Pandora's box is opened, an income tax for some of us will become an income tax for all of us," he said.
Eyman called the promise to divert half of the money for young children a "fig leaf".
"There is no such thing as 'assigned revenue'," he said. "Once you start collecting the income, you can spend it on anything you want."