The Senate will be asked to concur on a very different version of the income tax on capital gains (SB 5096) if a House Finance striker is adopted. Among the changes proposed by the House Finance striker is removing any tax relief (no funding for the working family rebate) as well as adding language to prohibit a referendum by the people. You’ll recall that removing the emergency clause was an important factor in the Senate’s original 25-24 passage of SB 5096.

Included in the proposed House Finance striker is this new language:

“The tax levied in subsection (1) of this section is necessary for the support of the state government and its existing public institutions.”

This is essentially a back-door emergency clause in an attempt to deny the people their right of referendum on the proposed income tax.

During the Senate floor debate on SB 5096 Sen. Hobbs said (1:43):

“I actually do believe there are times when you need emergency clause, but in this case Mr President, this act actually does not take effect for another two years. So really not an emergency.”

A majority of the Senate agreed and adopted this amendment from Sen. Hobbs:

“Removes the emergency clause. Removes language from the intent section specifying that the tax is necessary for the support of state government and its existing institutions.”

Sen. Robinson, sponsor of SB 5096, also indicated her belief the people should be able to run a referendum if they choose to (2:06:39):

“With the adoption of an earlier amendment the people are free to seek a referendum on this bill as they choose. I do not think this amendment is necessary. If our citizens want to put this to a referendum, they I'm sure will make that happen so asking for a no vote.”

It is clear from the floor debate that the intent of the Senate is to allow citizens to have the opportunity to run a referendum on SB 5096. The proposed House Finance striker, however, explicitly prohibits the right of referendum by adding a back-door emergency clause. If this amendment is adopted by the House, will denying the people their right of referendum be a deal breaker for this proposed income tax when it goes back to the Senate? 

The House Finance committee is scheduled to take executive action on the proposed SB 5096 striker this Friday at 9 a.m.

Additional Information
Income tax on capital gains passes Senate in 25-24 Saturday vote
Editorial coverage of capital gains income tax proposals
WA Capital Gains Income Tax Proposal: What You Need to Know!
A Capital Gains Tax IS an Income Tax: Irrefutable Proof in About Two Minutes (short video)
BAD POLICY: An Income Tax on Capital Gains for Washington (short video)