Washington state's new capital gains tax: a primer

[TexasTowelie]

After a decade of failed attempts, Democrats in Washington’s Legislature finally managed to pass a capital gains tax, which kicks in Jan. 1.

Republicans have fiercely opposed the tax, which applies to profits from selling assets, such as stocks and bonds. They say it will make Washington a less attractive place to do business. GOP lawmakers have also criticized it as a step toward taxing income more broadly.

Democrats, meanwhile, have called the capital gains tax a necessary step toward making the state’s tax system more fair — particularly in a state like Washington, which doesn’t tax income.

Now, with the capital gains tax on the verge of becoming reality, it faces legal challenges that could compromise Democrats’ vision of imposing higher taxes on the wealthy.

Read more: https://crosscut.com/politics/2021/12/washington-states-new-capital-gains-tax-primer

[PoindexterOglethorpe]

1. Honestly, I get so tired of people obsessing about taxes.

With capital gains, you only pay tax on whatever profit you made. And you still are ahead of the game.

Same with selling an inherited house. So what if there's some kind of tax due? You still have more money than you did before.

When it comes to inheritance, most people have no clue how much can be passed on before taxes are due. Recently, a relative talked about wanting to leave money to a relative who really did need financial help, but was concerned about the relative having to pay inheritance tax. I pointed out that it's the estate that pays the tax, not the inheritor, and that the amount that can be passed on tax-free is in the millions. When I got a blank stare, I repeated myself, saying I'd inherited money (from my husband's family) and so I knew something about this.

And honestly, if you have assets that will incur estate taxes, you can definitely afford the legal help to minimize such things.

[TexasTowelie]

2. What's worse is that there are people like my brother who do not understand what a graduated

income tax is. He believes that if he earns enough to move into another bracket that all of the income below that bracket line is taxed at the higher tax rate.

I seriously believe that all high school students should be required to take a finance and taxation class to learn basic principles, how to calculate a tax manually (okay, let them use a calculator), and how to reconcile between two different systems.

[PoindexterOglethorpe]

3. Oh, yes. Both to your brother's ignorance

and to the finance and taxation class.

When I was in 7th grade, my wonderful math teacher took a week out of the regular math curriculum to teach us a bunch of basic things. Like how to fill out a check. How interest rates worked, especially with mortgages. This was in 1962, which means ordinary people did not have credit cards back then, although that would clearly be a part of a modern class. He taught us a lot in that week, especially given how much simpler things were back then.

I'd include other things in my iteration of a semester long class on this stuff: How to apply for a job. How to do a job interview. How to compare the costs of various things. How much a new car costs. How much a used car costs. Stuff like that.

As for the calculator, absolutely let them use one. A long time ago I was someone who was utterly opposed to kids using calculators. Then I had a son who was fascinated by numbers and math, and when he was about four years old I bought him a very basic four function calculator. He used it to do all sorts of things he would never have done without it, and I suddenly realized the value of a calculator.

Another story. I went to high school in the 1960s, and so when I was taking math we obviously did not have calculators. When we were doing quadratic equations (and for those of you who never did them, or who did them but have forgotten, take some time out to review them and solve a few and I'll see you again after the end parenthesis) our math teacher could only assign three or four problems each night, because solving them strictly by pencil and paper was rather tedious and time consuming. I also recall once asking him if there wasn't a specific x for each and every y we might solve for. He said, yes, of course there was, but we had no way of finding them accurately. Some thirty years later I was taking college algebra at my local community college, and we were doing quadratic equations. Thanks to the miracle of calculators we could be assigned ten or more problems for homework each night, and yes, for each and every x there was a findable (thanks to the miracle of calculators) and specific y. I found myself playing with the equations, because I could, and paying attention to how changes in one part of the equation affected the rest. Cool.