State Goes on Offensive to Save Capital Gains Tax, Police Oversight Group Considers Candidate Forum, and Compassion Seattle Plays Victim

1. Washington State Attorney General Bob Ferguson filed a motion Tuesday seeking to have a Douglas County judge throw out two lawsuits against the capital gains tax. Ferguson argues in his motion that the plaintiffs filed the suits for political reasons and don’t have grounds to sue because they don’t know yet if they’d be subject to the tax.

The capital gains tax bill (SB 5096) imposes a 7 percent tax on profits of $250,000 or more from the sale of intangible financial assets, such as stocks and bonds. The bill would go into effect in 2022, but the state would not collect taxes until January 2023. Roughly 7,000 Washington taxpayers would be subject to the tax, which would generate $415 million for the state in its first year.

Three days after the legislature passed the bill, the Freedom Foundation, a conservative think tank, challenged the law in court. Less than a month later, former attorney general Rob McKenna, along with the Washington Farm Bureau, filed a second lawsuit against the bill. Both suits were filed in conservative Douglas County.

The lawsuits say taxing capital gains is unconstitutional because capital gains are property, and all property must be taxed at a uniform rate in Washington because of a 1933 state Supreme Court decision.

However, Democrats have argued that the capital gains tax is an excise (sales) tax, not a property tax, because it is triggered by the sale of financial assets.

Ferguson argued that the plaintiffs have asked the court to settle a political dispute, rather than a legal one, noting that they “are suffering no legal harm from the tax they challenge and ask this Court to issue a purely advisory political opinion.” He also argued that the lawsuits are preemptive and speculative, since the plaintiffs don’t know whether they’ll even have to pay the tax when it goes into effect in 2023.

The state Supreme Court is also hearing arguments for a lawsuit against the state’s 2019 bank business and occupation tax (HB 2167), which was also filed by McKenna. Washington State Solicitor General Noah Purcell argued at the court on May 25 that state law prohibits lawsuits against taxes until they have gone into effect. If the court sides with Purcell, the lawsuits against the capital gains tax might have to wait until state residents actually pay the tax, which wouldn’t be until 2023 at the earliest.

State Sen. Jamie Pedersen (D-43, Seattle) said that if the court dismisses the lawsuits, it will only delay the inevitable: having the state Supreme Court reviewing the law. Democrats want the court to review the tax because they believe the court would overturn the previous ruling declaring income a form of property, which would blow the doors open for an income tax.

The next hearing for the cases is set for July 13 at 10am, with Douglas County Superior Court Judge Brian Huber presiding.

2. The future of the Seattle Police Department is front-and-center in the upcoming elections, but some members of Seattle’s Community Police Commission (CPC)—the branch of the city’s police oversight system tasked with gathering community input on police reforms—are wary of wading into electoral politics.

Reverend Harriet Walden, the commission’s longest-serving member, also opposed the candidate forum. “It’s not part of our mission,” she said.

During the CPC meeting Wednesday, CPC communications director Jesse Franz described plans that are already underway for a general election forum that the CPC plans to co-host alongside a community organization involved in criminal justice reform, such as Choose 180 or Community Passageways.

But some prominent members of the commission pushed back on the plan. Suzette Dickerson, who will represent the CPC during contract negotiations with the Seattle Police Officers Guild next year, argued that hosting a candidate forum was outside the scope of the CPC’s responsibilities. From her perspective, the commission’s role is to be a sounding board for Seattle residents’ opinions on reforms to SPD; “stepping into the political arena,” she argued, would undermine public trust in the commission.

Reverend Harriet Walden, the commission’s longest-serving member, also opposed the candidate forum. “It’s not part of our mission,” she said, adding that she isn’t confident that the CPC would allow community groups opposed to downsizing SPD to have a voice in the forum. “I think that we’re headed down a path to help social engineer the defunding the police department,” she said.

The commission’s current leaders, however, supported the idea. “To me, holding a candidate forum seems within the scope of ensuring that the community is informed about what accountability may or may not look like, in particular candidates minds,” said CPC co-chair LaRond Baker.

Though the CPC can’t endorse candidates, the commission is not a neutral player in the police oversight sphere: It recommends reforms to SPD and Seattle’s police oversight system. Recent CPC recommendations have included a ban on tear gas and removing limits on the number of civilian investigators in the Office of Police Accountability. The success of those recommendations depends on the support of the mayor, the council, and the police chief, which gives the CPC a clear stake in the outcome of the election.

“Opponents have been using increasingly violent tactics against our signature collection teams,” the solicitation for funds claims. “We must persevere, and we need your help to ensure we reach 33,060 signatures by June 25.”

3. In a fundraising email Tuesday, the Compassion Seattle campaign, which is gathering signatures to get its charter amendment on homelessness on the November ballot, claimed that several of its paid signature gatherers have been attacked by people who oppose the initiative.

“Opponents have been using increasingly violent tactics against our signature collection teams,” the solicitation for funds claims. “We must persevere, and we need your help to ensure we reach 33,060 signatures by June 25.”

Compassion Seattle has hired a signature-gathering firm to promote the measure, which would require the city to create 2,000 new “emergency housing” units (shelter beds) by diverting existing human-services funds away from other purposes. The measure, whose goal is to “ensur[e] that City parks, playgrounds, sports fields, public spaces and sidewalks and streets remain open and clear of encampments,” includes no new funding for homelessness.

In painting itself as the victim, the campaign explicitly weaponizes unidentified women of color, saying that all the “incidents have involved young women on our signature teams; most women of color.” Obviously, attacking signature gatherers for any reason is, as the email says, “completely unacceptable.” But so is utilizing those attacks (and their victims) to raise money for an initiative that would disproportionately impact people of color.

The Compassion Seattle campaign, which says its temporary signature gatherers can make up to $30 an hour, has raised nearly $900,000 in contributions and pledges, according to its most recent campaign finance report. Of that, $184,000 has gone to its paid signature gathering firm, Salt Lake City-based Landslide Political.

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