Washington state approves capital gains tax • Hacker News Board

Re: Washington state approves capital gains tax

#31

Post by cynicalkane » Fri, Apr 30, 2021, 5:08 PM UTC

hahaxdxd123 wrote: post #9

Ah, so this bill will tax gains from productive activities like investing in and building companies, while exempting gains from rent seeking activities like real estate. Why am I not surprised?

Real estate has a powerful lobby and many property owners are well-connected themselves. A lot of people own property and don't see it as free money. They empathize with property owners. Though it's easier money if you're politically connected and/or already wealthy.

Stocks are held by rich people and techbros, in the minds of the public. Whether something is valuable or not valuable depends on who you empathize with. Right now occupations held by the wealthy are disliked and unpopular.

Really you should just tax income at high rates and investment at near-0%. When people cash out their investments, tax them at ordinary income rates. This is how your 401(k) or IRA already works. You'll need to raise taxes on the affluent who spend instead of save, but that's not a bad thing.

Re: Washington state approves capital gains tax

#32

Post by grumpitron » Fri, Apr 30, 2021, 5:09 PM UTC

zacharycohn wrote: post #19

As a Washington resident, I think this is great. WA has one of the most regressive tax systems in the country, and this is a move in the right direction. It's crafted to have a very narrow impact. It is capital gains, but essentially only for stock sales, and only for stocks sales over a quarter million dollars. If someone sells half a million dollars worth of stock, it seems very fair the state gets some cut of that…

I think it's even narrower than you point out, as it should be 250K of gains, not just of stock sales. If I, for example, sell 260K of an index fund that I bought for 240K, I shouldn't owe this tax. However, if I sell 260K of stock that I got at basically 0 monetary cost as a company founder, then I'd owe the tax.

Re: Washington state approves capital gains tax

#33

Post by giantg2 » Fri, Apr 30, 2021, 5:09 PM UTC

majormajor wrote: post #28

bestcoder69 wrote: post #21

Earlier quoted context omitted.

Non-pessimistic answer: it’s largely the only place the middle class parks its wealth. Besides that it would be stuff like 401k and Roth IRA which would also be exempt already. Pessimistic answer: it’s for developers and landlords

Yes, if you included real estate at the 250K number, you'd hit a much broader target than you would for stocks. But eliminating real estate entirely is a huge break for rent-seeking large landlords and developers. Probably should've simply chosen a higher dollar threshold for real estate.

They probably don't want the tax inflating real estate prices. Those rental owners will just pass the cost on to renters.

Re: Washington state approves capital gains tax

#34

Post by Relys » Fri, Apr 30, 2021, 5:10 PM UTC

decremental wrote: post #11

PragmaticPulp wrote: post #3

Details are sparse in this article. Looks like 7% capital gains tax, first $250K excluded, real estate excluded. Proceeds to primarily fund childhood education (for now). > For example, stock sales higher than $250,000 would be taxed at 7%. Real estate would not be. 7% (on top of federal cap gains, which are also increasing) is a significant tax rate to start with. If it was 1-2%, I could see people rolling with it.…

I doubt any business owners are thinking about moving to Portland.

When I lived there a few years ago, there was an increasing amount of tech companies from Seattle opening up offices in Portland.

Re: Washington state approves capital gains tax

#35

Post by BuyMyBitcoins » Fri, Apr 30, 2021, 5:11 PM UTC

egberts1 wrote: post #8

Proceeds to fund child education. Like the state gas tax, you still won’t get itemization of its breakdown to ensure that it is really where it is going to go. So, color me surprise.

It seems like almost every new kind of taxation gets pushed as something to fund education. For example, I was recently looking at buying a used car from a private seller and it turns out I have to pay a state sales tax on the purchase. Why? Well that specific tax was passed decades ago to fund state schools. Does the money still go to the schools? I have no clue but maybe not since the state is still considering hiking taxes to pay for more education.

Re: Washington state approves capital gains tax

#36

Post by endisneigh » Fri, Apr 30, 2021, 5:11 PM UTC

hahaxdxd123 wrote: post #9

Ah, so this bill will tax gains from productive activities like investing in and building companies, while exempting gains from rent seeking activities like real estate. Why am I not surprised?

My understanding is that real estate wasn’t subject to gains before this and it continues to be exempt.

Not to mention the first 250K is exempt. So basically this only effects those who are gaining a lot.

Re: Washington state approves capital gains tax

#37

Post by scsilver » Fri, Apr 30, 2021, 5:12 PM UTC

sickygnar wrote: post #13

Why is real estate always exempt from this stuff? Is there a good reason or is the special interest just large?

Landowners vote

Re: Washington state approves capital gains tax

#38

Post by pjc50 » Fri, Apr 30, 2021, 5:12 PM UTC

egberts1 wrote: post #8

Proceeds to fund child education. Like the state gas tax, you still won’t get itemization of its breakdown to ensure that it is really where it is going to go. So, color me surprise.

Hypothetication of taxes is never a good idea anyway.

Re: Washington state approves capital gains tax

#39

Post by philwelch » Fri, Apr 30, 2021, 5:12 PM UTC

verst wrote: post #16

PragmaticPulp wrote: post #3

Details are sparse in this article. Looks like 7% capital gains tax, first $250K excluded, real estate excluded. Proceeds to primarily fund childhood education (for now). > For example, stock sales higher than $250,000 would be taxed at 7%. Real estate would not be. 7% (on top of federal cap gains, which are also increasing) is a significant tax rate to start with. If it was 1-2%, I could see people rolling with it.…

The first 250k in profits from capital gains are exempt. It is estimated that this tax only affects the 7000 richest individuals in Washington. Keep in mind we don't have any income taxes here.

These taxes always start off only affecting the richest of the rich, until the government decides it needs more revenue.

Re: Washington state approves capital gains tax

#40

Post by gimmeThaBeet » Fri, Apr 30, 2021, 5:14 PM UTC

sickygnar wrote: post #13

Why is real estate always exempt from this stuff? Is there a good reason or is the special interest just large?

I half agree, there are no doubt interested businesses. I don't know what the breakdown in benefits between people and businesses, but I do agree.

But when you think about housing and capital gains tax benefits at a federal level, specifically related to one's primary residence, I think it's reasonable to say that taxing real estate sales (or at least housing) is not very popular in like, a literal sense. Now obviously people don't usually go selling their home every two years, so it might not be frequently relevant.

I just feel that housing transactions are, I don't know, more in public consciousness, than like selling a mutual fund? That assertion is basically speculation though, i.e. people might more commonly identify more as home owners, than people with large amounts of equities etc.

And I guess part of that is mental, and part financial, in that it seems housing is more frequently the biggest piece of one's total picture than I would guess.