Comments

1

Rich--I think you've done a great job covering this. Thanks!

2

Rich, in some cases, people actually did work to increase the value of their stocks.

We’re in a tech city and many people have high value assets in stock from their jobs (Microsoft and Amazon have a tendency to pay their employees’ bonuses in stock rather than cash. The lift in stock value is partly directly attributable to their hard work. It’s easy to defend this tax increase without claiming that the employees did absolutely nothing to increase the stock in value.

3

This "Taxpayer Relief Account" no specifics just a tag line. Another give us the money and we will worry about that later.

May I add to this Bill, Good Luck.

4

Good analysis.

Make it so!

@2 golf is not work.

5

@4, Then a business lunch isn't either, nevertheless great things have happened over enjoyable activities between businesses where people relax and communicate better. That's why they do them.

6

@4 Programming is work. Marketing, advertising, and design is work. Accounting is work.

I’m not talking about management. I’m saying Amazon and Microsoft (if not also Boeing) tends to pay their corporate employees stock and many longer-term employees probably have at least $250k in stock.

7

@4, One example, my wife works for a company that makes a product that others sell. She has no interest in golf yet on occasions must play with customers who do. This may include lunch, the afternoon and maybe even dinner. Multiple States too. Technically you could say it's not work like digging a ditch together but relationships grow, contracts happen and conversations over long periods everyone understands each others needs and problems. Still my wife must put on her business face and frame of mind, be friendly and be fully aware she's spending time with a client. She's on salary and these events extend well over the 40 hour work week meeting a hundred or more customers on occasions try to remember their names.

It's not digging a ditch but it's work.

8

I support the tax.

However, "I cannot stress this enough, you did nothing to earn" is a moronic statement that has become par for the course here at The Stranger. The Stranger staff seems hell bent on alienating as much of their audience as possible, or at least what I thought was their audience. TS is quickly becoming a hate-read for me.

9

WOOOOOOOOOOOOOOOOOOOOOOO ABOUT GODDAM TIME. It's a shame it's so measly, but better than nothing

10

@2 The primary reason companies compensate their employees with stock rather than wages in the first place was to evade the tax man. But he'll always catch up in the end.

11

@10: That might be an effect, but not a reason. The reason is to provide employees a part of the business, to rise and fall with the market. Moreover, employees can roll over their stock into an IRA with no (or little) capital gains consequence.

12

Every other state in the union that has a capitol gains tax treats it as an income tax as does the IRS. So either our politicians are craftier than every other taxing organization or they are being completely dishonest about what is going on here. They know this is going to get challenged amd as Sen Pederson states the hope is for the supremes to overturn their previous decisions. It will take a few years but given the liberal slant on the court nowadays I expect we’ll all be paying income tax by 2025. As Dr Strange said “We’re in the endgame now”

13

Rich, your example involving the sale of $350K in stock is true only if the cost basis for the investment was $0 (which is impossible). A capital gain is the spread between the acquisition price and the sale price of an asset. But I suspect you have never paid a capital gains tax...

14

@10, Not really. The primary reason is that you can print shares rather than having to actually pay people real money and yet they're still happy to work for them.

15

@14: So you must find it strange that employees would voluntarily participate in the company's employee stock purchase program in addition to their grants. Must be real suckers.

16

Neat. A single (objectively pathetic) attempt at redressing the horrific injustice that is WA state's tax code. And I say objectively pathetic because it really, really is. You allow $250K of gains tax free? What a bunch of assholes. I guess optimistically, you could say this bill is so bad because you just need to push something out the door that provokes the lawsuit that would resolve the legal issues. But WA will continue to be a moral abomination of "woke" fauxgressive assholes till you enact actually fair tax policy.

YOU NEED TO PAY MORE TO YOUR STATE. Like "you" is people like Rich Smith and the "middle class" who has been riding around on the backs and the necks of poor people in your state for decades. It's not "just the super rich" who need to pay fair state taxes.

YOU DO!

17

@15, depends on the company. However, this is a completely different subject and I can't really understand why you'd think I would find this strange based on anything I said.

18

@4 Stupid little asshole like Will think business lunches and off-sites are "fun"?! Like...things people would do voluntarily if it wasn't part of their job? What a fucking loser. Like..."Tell you're economic loser and an uneducated fuckwad without telling us you're an economic loser, and an uneducated fuckwad!!!" You're being ignored, Will. because you're literally fucking pathetic.

19

"which, and I cannot stress this enough, you did nothing to earn"

Rich, how about just saying "thanks for the 7%, enjoy the other 93% minus whatever the feds take"? It doesn't cost anything to be polite.

20

@10 That’s funny because employees have to pay taxes on the stock vests as if it were income.

You get a vest of 9 shares of stock and your tax bracket is 25%, you’re paying 25% tax on those 9 shares. It’s not even much of a tax scam.

21

Capital gains are earned by assuming risk. Instead of putting money in a savings account or hiding it in their mattress, investors take the chance of losing money while making educated guesses about what investments will yield the highest returns. In turn, their investments provide companies with capital, which they (theoretically) invest in growing their revenue.

I fully support this tax. Our state tax revenues will take a huge hit this year, so some kind of tax increase is going to be necessary. This proposal stands out among Washington revenue schemes for falling on the people who can best afford it, a welcome change in our regressive system.

But saying "you did nothing to earn it" is only true if one believes that things can only be earned through hard manual labor. Making good investments is mental labor.

22

Microsoft paid out bonuses in stock early on, but not as much any more. They did it because it was cheaper to pay in stock than to pay in cash. That was a great deal in the early years, when their stock was soaring. I personally know 3 early Microsoft employees who became multi-millionaires from their stock bonuses (none of them would object to this new capitol gains tax proposal). These days, as Microsoft stock has plateaued, they more often pay in cash and higher salaries, because giving stock to employees isn't as much of a benny as it once was.

@6, generally Boeing does not give out stock to its employees. A handful of top executives get very generous stock bonuses, but the practice is not widespread. Unlike tech startups, Boeing is an old-school heavy manufacturer. Neither their machinist union nor the engineering union have pushed for stock bonuses. They'd rather have cash. But other than Boeing, you are right about a lot of other tech and startups in the area, that do pay out in stock.

23

@22: Stock is typically evaluated in years. In these years, it went from $53.07 in March 2016 to $244.99 in Feb 2021. A pleasant plateau for its shareholders nevertheless.

24

@21 first, our state revenues will not take a huge hit this year. The last rev forecast cut the projected budget deficit in half and the next one will prob be even better. Second, most of the money from this tax is allocated to new programs ($350M) with $100M targeted to the general fund. So this tax does not help either the budget or offset regressive taxes.

Look if the leg wants to fix the tax code fine. Put a constitutional amendment on the ballot to classify income is not property and make it all revenue neutral. They are too chicken shit to do that though because it will lose and they’ll be tossed out of office so they are taking the coawards road and pursuing this through the courts. I can only hope the supremes toss it out as they rightly should and make the leg amend the state constitution. I’m not confident that will happen though.

25

@23, selective quotes won't help you. Yes, Microsoft stock has shot up in the last few years. But it was pretty stagnant for 20 years prior to the recent surge. It was during that 20 year stagnation that Microsoft reigned in their early practice of paying out in stock, which was very common back in the 1980s and early 1990s.

26

@25: Yes, that twenty year stagnation period you selectively refer to occurred during the Steve Ballmer years.

27

Being rude to Rich and Will is a real turnoff and they have a right to their opinions.

As for my peer group we are poor and struggle to make ends meet everyday. We are not cut any slack with the taxes. We reuse what ever we can, use food banks, and rarely buy anything new. We help each other that's how we make it. Some of us worked for over 50 years and lost our homes in 2008/9 when the banks were bailed out and we were not.
My family helped me or I would have lost my house during that time. Many of my friends were forced to move from here because it is so expensive.

I'm very old and live off social security which is a pittance. This is a cruel and unforgiving economy and it is ruthless to the working class. I consider myself lucky because I have a house.

By the way, numerous reporters and many writers don't make much money so I doubt many can be considered at a middle class economic level.

Many musicians, artists, poets, activists, women's work and many talented others are not rewarded materially in this type of economy.

A tiny group of people is hoarding approximately half the wealth of this country and to ask for this Capital Gains tax is truly pathetic. It is nowhere near enough to address the dire poverty that is rampant is this country. Have you noticed? Especially old, women and children, working class of all colors are paying the price for the billionaires.

It is a disgrace that more cannot be done to eradicate this inequality. The people will have to take up this issue themselves as comfy politicians and the privileged won't do it unless made to do so. Sometimes things can happen fast with pressure from the public. Never say never.

No one should have to put up with the cold, the rain, living in poorly sheltered conditions and the unrelenting bigotry against the poor manifested by this system.

It just takes one disaster in this economy to join the very poor.

28

When I had stocks some years ago I did nothing. They just sat there and either earned interest or didn't. It didn't require any "work" from me.

Yes, I know the difference because I worked at jobs for over 50 years.

As for investing, that is usually something done under the advice of a financial expert.
It is not something most people have the privilege of doing since they are focused on paying their bills.

29

@27 People are rude to Rich because he, and pretty much all of the Stranger’s writers, don’t understand basic shit and throw their misguided and incorrect beliefs into their “reporting”.

Rich, investors earn the profit by -and lets see if you can follow along - providing capital to companies. When you buy a stock, you provide money to a company to help grow that company. If the company does grow (hiring more people) and become more profitable, the investor is rewarded with a higher value. It’s not rocket science... well, I guess it is for you.

“Did nothing to earn”... spoken like someone that’s always asking for a handout.

30

@27, 27, Ivy, stuff it. Again, don't need to be lectured when I (and others) say we generally support more taxes on the wealthy but think TS staff attitude sucks. Talk about turnoffs, I for one have had it. I'm tired of being made out to be an asshole because in some areas of my life, I've had just a bit of good fortune, or I simply need to drive a car for work.

Everything here is about establishing a culture of victimization - everyone's a racist, or a sexual predator, or hates homeless people just because they want to use the city public spaces as they were intended. TS regularly traffics in the kind of identity politics that gives liberals the generally undeserved reputation of being all about identity politics. They have become the left's version of MyNorthwest (Rantz, Monson, et al).

31

Just pay the damn tax, rich people. You've been on the gravy train in this state and this country for four decades, and the rest of us have nothing to show from your windfalls. Do the decent thing for once and pay what you truly owe- you'll still be ore than rich enough afterwards.

32

30: So...you're against "a culture of victimization", but you proclaim YOURSELF a victim. Interesting.

33

Hey Pretty in Pink, I am not against you driving your car to work or having your benefits.
This is not about you. You probably need a vacation. We are not blaming you. I wish you the most glorious life possible. I wish you the best.

We have to state our case somewhere.

Its about leaving homeless people out in the rain and a wealthy city doing NOTHING or little about it particularly the mayor's regime that has refused federal funds that would help house people. Refused it twice not once. Its about a bloated police budget. ETC.
Its my job as an activist to raise hell. Its not about annoying you.

34

I don't know where my previous comment went in answer to Pretty in Pink.

However, I think its great that the writers here are taking up the mantle of the disenfranchised.
More power to them.

35

Sorry, Stranger there was just a little miscommunication there.

36

@33: Wow. A quick search found an example. Sure enough, the mayor of Seattle did indeed reject federal funding for housing the homeless in hotels claiming the city would not be adequately reimbursed by FEMA.

The mayor, unfortunately, appears to have a character defect.

37

https://www.realchangenews.org/news/2021/03/03/mayor-durkan-rejects-federal-funding-hotel-shelters-city-opening-new-permanent-vaccine

38

I support this tax increase. Along with several other commenters here, I agree The Stranger does it no favors by sneering that capital gains were not earned. Where I work, employees are granted both stock options and ability to buy shares pre-IPO. Both are aspects of our compensation, just like our incomes, medical insurance for our families, etc. If we choose to invest our money in our company and it prospers, we may see capital gains sometime in our future. If we fail, we could lose everything we invest, along with our jobs. Those are risks we're taking, and if we succeed, we'll be happy to pay taxes on our resultant capital gains.

Also, there should be no emergency clause on this tax increase. Besides there being no emergency, this tax is a fundamental change in Washington State's tax code. Voters should, if we wish, have the right to vote on it ourselves.

Ivy: if, yet again, you want to drag in your tired (and tiresome) hatred of Mayor Durkan, please explain where the $100M we've been spending annually on the homeless went. That's ~$10K per homeless person, per year, and yet there are still many homeless persons occupying our parks and other public spaces. Tell us why our current spending has failed so miserably, before you demand more.

39

If this Tax is so popular put it up for Vote.

40

@33 Ivy, If I conflated in error your opening paragraph, which appeared directed at posts like mine, with the rest of your post, I apologize. It's just that I've been lectured far too often recently on topics that I don't have much, if any, disagreement with.

I applaud activism when it's constructively directed at making the world a better place. Unfortunately, a lot of "activism" that's in TS appears to be more about separating us and making people feel bad simply because they don't live pay check to pay check, or they're not a person of color, etc. That's not call for white/privleged victimhood in society at large. It's here, at this publication. I'm tired of reading THIS publication that makes me out to be somehow a lesser person simply because I can pay next month's rent and I have a problem with people living in tents down the block from me. And before I receive another lecture about the homeless problem, I somehow have this unique ability in this publication's comment space to hold two thoughts in my brain at the same time - yes, there's a homeless problem that is a national embarrassment and cruel to those so disadvantaged, while at the same time, I don't want homeless people camped out in every public space in my community.

Best to you as well.

41

@40: Well said. Thank you.

"I'm tired of reading THIS publication that makes me out to be somehow a lesser person simply because I can pay next month's rent and I have a problem with people living in tents down the block from me."

The Stranger continues to wallow in the Kool-Aid pushed by our Homeless Industrial Complex, and their enablers on our City Council, principally CMs Herbold and Sawant. This fantasy says that EEEEbil Amazon priced hard-working poor people out of Seattle. (Why they didn't just leave, and go live elsewhere, is never explained.) Thus, it's just a housing-affordability problem, nothing more. From this it follows that anyone who opposes this simple solution hates the homeless.

In reality, as anyone who has ever had the slightest personal interaction with the homeless immediately knows, drug addiction plays a huge role in making, and keeping, them homeless. The City's own survey of homeless persons confirmed this, years ago:

http://coshumaninterests-wpengine.netdna-ssl.com/wp-content/uploads/2017/04/City-of-Seattle-Report-FINAL-with-4.11.17-additions.pdf

Majority of homeless arrived here already homeless, graph on page 1;
Majority of homeless report drug use, second graph on page 4;
Majority of homeless are unemployed, Fig. 7 (p. 12)
Vast majority of homeless (68.7%) not originally from Seattle, Fig. 13 (p. 16)

Solving this drug-addiction, public-health crisis will cost far more money than simply building houses, and will require a huge change in our focus. With our Council refusing to admit these plain facts, and The Stranger enabling our Council's abject denial, we cannot have a civic conversation on how to address our homeless problem. Hence, we spend ~$100M annually to have people living in tents down your street -- a result we could get for free, and direct that $100M to better schools in minority neighborhoods, or to any other good cause where we can get results for money spent.

(The last time I quoted that survey, Ivy derided it as "crap," and demanded I shut up. So much for respectful civic dialog here.)

42

Rich - Echocing @1 appreciate the coverage. But also echoing @13, this is actually not correct: " (So, for example, if you cash out on $350,000 in stocks two years from now, you'd pay the state $7,000 on your $100,000 in profit over $250,000, which, and I cannot stress this enough, you did nothing to earn.)"

The cost basis is excluded. So, for example, if you bought (or vested a a grant) $250k in shares, and they doubled, and you sold it all to pocket $500k, you'd pay 0 tax (your capital gain was $250k, the threshold for where it kicks in "over $250k). If it tripled and you pocketed $750k, you'd pay 7% on that second $250k of gains.

That's why any expression of concern for tech workers is off base - speaking as a tech worker, if you're routinely pocketing $250k in gains in any given year, you're either lottery winner lucky or handily rich.

43

Oh the humanity! A person does nothing to earn their gains, thus they should pay a unique tax to the state, only if it is more than 250K per year. What of those who have Capital Gains in their retirement accounts. They did nothing to earn this gain. Why shoulkd they not pay it? What of those who may have made 50,000 in gains? Why shield that amount? What about those whose homes increased in value, while they did nothing but live there and had nothing to do with the increase? The list goes on. This is an income tax plain and simple, and won't pass court muster. As others have said, so confident that the people want and need this tax, let them (us) vote on it.

44

I support this tax and largely agree with this article.

However, I also agree with @21 that saying investors do "nothing to earn" the returns on their investments is inaccurate. As @21 said, investors earn the return by assuming risk and by doing the work of managing. Entire companies are devoted to managing investments, because it is work. Investors play a very useful role in our economy; why demonize them and misinform your readers? You can make your argument that taxing capital gains is the right thing morally, economically, and politically without spreading misinformation.

45

@42 Nobody is saying the tax increase is bad, they’re saying Rich is off base for saying that people did nothing to earn that money. In some cases, yes they did. And, in some cases, they earned it very fast. For instance: if you got hired in 2012, and you got a 30k hiring bonus in Amazon stock (100 shares) that all vested by 2015...that 30k is now worth 300k.

Additionally, you don’t pay off the gains on an annual basis, you only pay them off when you sell the stock. So, if you wanted to sell the now $300k worth of stock, you’d be paying $1,400 on the $20k that’s increased in value over $250k.

It’s not unreasonable for 1990s workers to now have millions in stock.

47

Since the Capital Gains tax will generate $500 million per year is there a $500 million per year reduction in the regressive sales or property taxes?

We aren't going to get a less regressive tax system in Washington just by adding taxes, we'll need to eliminate regressive taxes as well.

48

@43 Being one of the millions who was burned in 2000 and 2008 by mutual funds and managed accounts I've taken over my own investment decisions, and it is work. To do it right you need to spend a considerable amount of time researching the companies, researching the markets, educating yourself on industry and general trends, disciplining yourself to avoid panic sells (or buys) and learning from your mistakes.

When I first took over there was a pretty steep learning curve. Even though I'm a buy and hold investor I still need to monitor making adjustments as economic conditions change or as companies turnout to be not be as solid as they initially looked.

I look at my portfolio and take pride in the decisions I made that made it what it is. It was work, not the same kind of work as my career, but work none-the-less.

49

Rich, if a janitor put, say, $10,000 together and bought a CD at 2% or so, would you say he's done nothing to earn that interest?

50

"For instance: if you got hired in 2012, and you got a 30k hiring bonus in Amazon stock (100 shares) that all vested by 2015...that 30k is now worth 300k."

@45 that to me honestly reads like a defense of Rich's point: if you're a junior person in a giant company and your stock grants 10X over a few years, no matter how hard you worked you were mostly "in the right place, at the right time." Good for you, but the outsize returns are luck rather than something you "caused."

52

ah yes the Classic Class War
has NO chance in hell when
One side OWNS the Means
of Communication. duh?

"Hell YES there's Class Warfare
and WE're WINNING it!"
--Chip Hanauer*

*actual Billionaire
not some jealous
peasant by Gawd

55

@51 - I'd argue that taxing the rich and using the proceeds to fund social programs can very much help the poor. And you are probably right that the threshold will be lowered. It probably should be. We've needed an income-based tax in this state for decades. Might not need to be 7% at lower income levels although there may be constitutional problems with a graduated rate. But I do agree that we should be honest and not dismiss the slippery slope argument out of hand. We look disingenuous when we do.

56

@55 This whole capitol gains tax charade is disingenuous. The primary reason this is moving forward is to get a case in front of the Supremes in the hope they'll revisit their previous rulings regarding incomes as property which would then open the door for a progressive income tax that we will all pay. If the legislature was honest they would make a case to the people and put forth a constitutional amendment to change the requirement that property be taxed uniformly. I can only guess they won't do that because they don't believe they can win a vote so they keep trying these backdoor approaches via the courts (much like Seattle's shot down try at an income tax). It's chicken shit and I hope the courts call them on it.

57

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