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Comment by zacharycohn | Hacker News Reader

As a Washington resident, I think this is great. WA has one of the most regressive tax systems in the country, and this is a move in the right direction.

It's crafted to have a very narrow impact. It is capital gains, but essentially only for stock sales, and only for stocks sales over a quarter million dollars. If someone sells half a million dollars worth of stock, it seems very fair the state gets some cut of that - especially if it's earmarked for childhood education.

I can only hope I'm successful enough to one day pay this tax.

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> especially if it's earmarked for childhood education.

If it's earmarked for childhood education then don't be surprised if other childhood education funds are reallocated elsewhere.

They won't be in WA. They've been underfunding education for years and are under a state Supreme Court mandate to increase funding. I'm not 100% sure that's still in effect but my property taxes nearly doubled 2017->2018.

Haha yes ... earmarking funds for noble causes is the ultimate fake out. Lottery money all goes to noble causes right, right?

Depends on your state, but I guarantee the information is available to you. You can ask your state representative for more information if you're curious.

Here's the 2020 financial report for WA's lottery: https://walottery.com/About/assets/docs/20AnnualReport.pdf

Page 31 is probably what you're looking for. The majority of payments ($141 million) went to the Washington Opportunity Pathways Account, relevant statute here: https://app.leg.wa.gov/RCW/default.aspx?cite=28B.76.526

The concern is usually that (made up numbers) school is budgeted at 100M/yr from the general fund. Then they get a lottery that provides 30M/yr, and 100% goes to the schools. Now the schools have 130M/yr right? But the worry is instead they reduce the funds from the general budget to 70M. The lottery money all went to the schools, but the extra 30M went to the general fund.

Yeah, money is fungible. Earmarking for a specific cause X just means less of X's funding comes from the general fund.

You could think of it that way, but funds such as those created by the lottery are less discretionary than the general fund -- so isn't this a good thing?

I think it's even narrower than you point out, as it should be 250K of gains, not just of stock sales. If I, for example, sell 260K of an index fund that I bought for 240K, I shouldn't owe this tax. However, if I sell 260K of stock that I got at basically 0 monetary cost as a company founder, then I'd owe the tax.

This is correct, it's over 250k in gains. Important distinction that may be getting intentionally muddied.

I'm not a fan of labelling tax code as "regressive" in this case. It hasn't moved "backwards", it's stayed the same.

I also question the rationale behind giving our city and state more money... they haven't exactly exhibited forthright stewardship of existing tax resources. I have doubts that taking more capital gains taxes will be a net positive. This will in all likelihood negatively impact the region's yearly charitable donations. It will be interesting if someone does a before/after comparison of the net effect of this new tax.

I believe zacharycohn meant "regressive" as in "imposes a harsher burden on lower-income households than on households with higher incomes."[0] In this sense, Washington state does have a regressive tax system, in part thanks to 0% income tax and higher than average sales tax.

[0] https://www.thebalance.com/regressive-tax-definition-history...

Upvoted you. After reading the comment again I see that it should be interpreted the way you describe.

Yes, progressive vs regressive taxes are a technical term.

Yes, but I think it's a relatively new or transient interpretation. I couldn't find much of an authoritative basis for it. It would be great if you could post any links that you know of.

There's a wikipedia article on it, but none of the key references exist any more : https://en.wikipedia.org/wiki/Regressive_tax

"The technical term for such taxation is regressive taxation" - Seligman 1894 https://www.jstor.org/stable/pdf/2485696.pdf

>If someone sells half a million dollars worth of stock, it seems very fair the state gets some cut of that

Yes very fair, after all the state took all that risk on those stocks and deserves something too. And to think that business you built should be all yours and not theirs also.

Like Warren said you are only successful because of the rest of us......

“You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

- Elizabeth Warren

Thank you for giving me hope that common sense still exists!

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