Nonpartisan legislative staff have published their bill report for the Governor’s proposed 9% income tax on capital gains. As to be expected when professionals analyze an income tax proposal, the bill report contains lots of discussion about income taxes. From the SB 5096 bill report:

• “Under the federal tax code, individuals and corporations pay income tax on the net total of all their capital gains just as they do on other sorts of income.”
   
• “Short-term capital gains are taxed at the individual's ordinary income tax rate, and are defined as capital assets held for a year or less before being sold. Currently, long-term capital gains are generally taxed at a preferential rate in comparison to ordinary income for federal income tax purposes.”
   
• “In addition to the federal tax, capital gains are often subject to state income taxes. Most states do not have separate capital gains tax rates. Instead, most states tax capital gains as ordinary income subject to the state's income tax rates.”
   
• “The tax rate is 9.0 percent. Generally, the tax rate is applied to the capital gains amount reported on the individual's federal income tax return.”
   
• “All taxpayers must file with the state Department of Revenue (DOR), a CGT return for each taxable year; however, a person with no tax liability is not required to file a tax return. The due date of the state CGT return is the due date for the federal income tax return, unless otherwise required by DOR. The first state CGT returns are due in 2023.”
   
• “A legislative directive to the courts is provided that requires ambiguous language to be construed in favor of application of the tax.”
   
• “To aid in the administration and collection of the CGT, DOR is authorized to enter into reciprocal tax collection agreements with taxing officials in other states imposing state income taxes . . .”
   
• “The bill contains an emergency clause and takes effect immediately.”

As for the emergency clause, why would the sponsors of SB 5096 need to prevent the people’s constitutional right of referendum on a new tax that isn’t first due until April 2023?

Additional Information
SB 5096 would impose a 9% income tax on capital gains in Washington state