Spin Control: Capital gains challenges are becoming the norm, but the latest would also make a good lesson for an English class

It didn’t take a crystal ball to predict that supporters of Initiative 1929 would file a legal challenge to the state Attorney General’s proposed title and description of their ballot measure.

But it might have taken a junior high English teacher to predict one of their objections.

The initiative campaign’s lawsuit asserts that punctuation as well as words matter, both the number of words included and words that have been left out.

Initiative 1929 was filed last month by a group that wants to do away with the capital gains tax that was passed last year and is due to take effect next year. Opponents say it’s a form of an income tax, while supporters say it’s really an excise tax.

To some people, that may be a distinction without a difference because taxes are taxes. It matters not what they are called but whether you have to pay them and how much they will cost you.

In Washington, however, an excise tax is constitutional and an income tax is not. So it’s not surprising that legislative Democrats who voted for the law and Gov. Jay Inslee, who signed it, argue this is an excise tax.

Unfortunately for people who agree with them, Douglas County Superior Court Judge Brian Huber, who heard a legal challenge to the law, said last month the tax is set up like an income tax, being collected once a year, rather than an excise tax, which is collected at the time of a transaction like a sales tax.

In the lawsuit filed last week in Thurston County Superior Court and distributed courtesy of the Washington Policy Center, the I-1929 campaign argued voters should be given a ballot description stating, “This measure would repeal a 7% tax on individuals with annual capital gains income above $250,000, subject to certain credits, deductions, and exemptions.”

Having “income” anywhere close to “tax” in an initiative is often the kiss of death in Washington politics, as both sides of this dispute know.

But under state law, the attorney general’s office writes the proposed description and summary. It proposed, “This measure would repeal a 7% excise tax on annual capital-gains above $250,000 by individuals from the sale/exchange of stocks and certain other capital assets (the tax exempts real estate and retirement accounts).”

State law has a limit of 30 words for the ballot descriptions, the I-1929 campaign notes in its lawsuit, and the attorney general’s proposal is over that, while theirs is under. Beyond that, it argues, capital gains shouldn’t be hyphenated even in an effort to combine two words into one, and putting a slash between sale and exchange makes no sense. It’s also missing a verb that would make clear who is levying and who is paying the taxes, they contend.

The campaign also takes issue with certain parts of the ballot summary. But a main argument is that Huber ruled it was an income tax, and although the state has appealed that ruling, it should be called an income tax unless a higher court says otherwise.

If the Supreme Court agrees with Huber, however, the initiative is pretty much moot.

By the numbers

The Seattle Chamber of Commerce recently released results of a March survey of city voters, which shows that people are more reluctant to venture downtown, particularly at night, and want something done about the homelessness problem. Not surprising, considering some local news depicts the city most nights as a cross between an urban hellscape and a shooting gallery.

Three out of four said the city was on the wrong track, and four of five said their quality of life is worse than four years ago.

While it wasn’t surprising that 59% said their taxes were too high and that 71% said they didn’t trust the city to spend their tax dollars responsibly, it was somewhat contradictory that 61% said the city needs more money to address homelessness. But then two-thirds thought the city should solve its budget problems by prioritizing basics, supporting the most vulnerable residents and reducing noncritical spending.

Of the 700 people surveyed, 60% self-identified as Democrats and 20% as independents. Republicans, at 12%, beat out Socialists at 7%. Two-thirds of the entire survey said they’ve considered moving out of Seattle, although for Republicans, that number was 100%.