Schmudget Blog
— filed under: ,

Updated data: Capital Gains Still More Concentrated Among Wealthiest Few

Posted by Andy Nicholas at Jan 31, 2012 12:35 PM |

The capital gains tax proposed in House Bill 2563  represents a bold path to a more stable and adequate revenue system in our state.  The measure would create a new 5 percent excise tax on capital gains in excess of $10,000 each year in Washington state. As we’ve discussed previously (here and here), capital gains – profits on the sale of corporate stocks, bonds, and real estate assets – are highly concentrated among the richest households in our nation. However, new data from the nonpartisan Tax Policy  Center (TPC) shows that capital gains have become significantly more concentrated among the richest few since the onset of the Great Recession.

As of 2010, the TPC’s data show that 96 percent of capital gains were going to a small minority of very wealthy households – those with incomes above $1 million per year (see graph below). Furthermore, on average, households earning less than $200,000 per year experienced net capital losses in 2010, meaning they lost money on sales of stock or other capital assets. (Capital losses would not be taxed under HB 2563. In fact, capital losses are deductible from federal income taxes.)

2012-01_CapGains_TPC

The extreme concentration of capital gains among the richest Washingtonians means that a tax on these resources would be paid almost exclusively by those at the top of the income scale. Even so, HB 2563 goes a step further by establishing an exemption on the first $10,000 of capital gains ($5,000 for single filers). The $10,000 exemption would limit the tax to only about three percent of Washingtonians.

Accordingly, the measure would tap into a highly concentrated economic resource in order to sustain our public investments in health care, education, and safe communities – all vital to long-term and broadly shared economic growth. 

For more information check out  our policy brief, “A Capital Reform: Using Capital Gains to Fuel Job Creation and Economic Prosperity in Washington State.”

Document Actions
HIGHLIGHTS

Policy Summit You're InvitedSign Up and Save the Date!

We will host two Budget Matters policy summits this year – one in Spokane on October 31 (register now) and one in Seattle on December 6 (registration coming soon)! The Spokane summit, featuring Jared Bernstein of the Center on Budget and Policy Priorities, will focus on the impact of federal and state policy decisions on eastern Washington communities. The Seattle summit, featuring Glenn Harris of Race Forward, will examine what it would take to lift up everyone to advance progress in our state. Find out more.

Our Policy Priorities

Washington state should be a place where all our residents have strong communities, great schools, and the chance for a bright future. Our 2017-2019 Legislative Agenda outlines the priorities we are working to advance to build a better Washington.

Budget Beat!

Check out the Budget Beat webinars we hosted throughout the 2017 legislative session, including our most recent Budget Beat about federal budget proposals, featuring Louisa Warren of the Center on Budget and Policy Priorities, on our YouTube channel

Testimonies in Olympia

To advance our legislative priorities, the Budget & Policy Center team was in the state capitol throughout session testifying on a wide range of bills. Watch our testimonies on TVW:
Misha TVW