Sharon H. Chen: Washington’s rich should pay more taxes

By Sharon H. Chen

All wealthy people need to pay more taxes – and I should know, I’m one of them.

Yet a few folks who’ve done well are upset about paying Washington’s new capital gains tax of 7% on stock profits larger than $250,000 so they’ve sued the state. This tax doesn’t apply to personal or corporate real estate, or IRAs or pensions, or small family businesses or farms, which are all exempted. This tax only applies to stocks, bonds and other financial assets, and it only applies to profits beyond $250,000 in a given year.

Think about how huge the principle needs to be in order to have those gains. If you’re one of the 0.2% of Washingtonians with that much money, you’ve likely held on to the principle for more than a year. You aren’t using those funds for everyday needs and the money is not circulating through Washington’s economy.

To those who say the new state capital gains tax on stock profits bigger than $250,000 will somehow drive away our wealthiest residents – that’s not how it works. Wealthy people move to, and stay in, places that have great schools and universities, clean air and water, healthy food, and a vibrant culture.

I came to Washington 30 years ago for a job at Microsoft and because this state is breathtakingly beautiful. I was smitten with the mountains and sparkling water. I believed, and I still do, that Washington could be one of the best places in the world to work, live and raise a family. And I want this possibility to be true for Washington.

The biggest barrier to taking Washington to the top is our upside down tax code. Washington is the worst in the U.S., where the poorest pay the highest share of their incomes in state and local taxes (17%) while the richest pay the least (3% or even less). Nearly every state in the U.S. already taxes capital gains, including our neighbors Idaho, Montana, Oregon and Utah.

Despite Washington’s reputation as progressive utopia, our state is the second-worst in the country behind Arizona when it comes to inequitable funding for poor school districts, where the difference between nonwhite and white districts is 42% less funding per student. More than 230,000 children live in poverty here. Working parents struggle to find child care because there’s capacity for just 17% of children under 13. The list of our shortfalls is a long one.

This means we need to invest more in our state and to do that I and other wealthy Washingtonians need to start paying our fair share in taxes. Sometimes in our culture, we are encouraged to think only of ourselves and grab as many resources as we can. I think this is a short-sighted mindset and ultimately works against self-interest, starving ourselves of the benefits of a healthy, vibrant community. The best living conditions in the world have incredible public libraries, beautiful public parks, top schools, and an educated citizenry.

Washington’s system pits students, patients and the most vulnerable against each other in a mad budget scramble every year for limited resources. It also exacerbates racial inequality, taking a larger proportion of money from Black, Brown and Indigenous taxpayers than from white ones.

My family is fortunate enough to be one of those who will pay the tax. Honestly, I see it as a sign of my good fortune.

This state deserves strong public investment to protect the things we all find precious, like clean air and water. Washington deserves a first -class education for our kids, beautiful parks and common spaces, a strong public health system and resilience for our future. These things don’t come for free. We who have prospered here should welcome the opportunity to pay this tax and pay our fair share.

Sharon H. Chen lives in Seattle.