Washington state residents have voted decisively against two ballot measures that sought to eliminate both the state’s capital gains tax and its carbon emissions reduction program. The initiatives, which aimed to reshape the state’s tax and environmental policies, were rejected by substantial margins in Tuesday’s election.
Initiative 2109, which targeted the removal of Washington’s capital gains tax, was defeated with more than 63% of voters opposing the measure, based on results with 58% of votes counted as of Tuesday evening. The tax, which has generated $1.2 billion in its first two years, funds public education, early learning programs, and school construction projects. State financial analysts had projected that repealing the 7% tax would have resulted in a $2.2 billion revenue loss over five years.
Similarly, Initiative 2117, which sought to dismantle the state’s cap-and-invest carbon market program, was rejected by nearly 62% of voters. The climate initiative, established by the Climate Commitment Act three years ago, has been generating billions in revenue for various environmental projects, including support for communities most affected by climate change and funding for transportation
infrastructure.
The opposition to I-2117 garnered support from a broad coalition of 500 organizations, including major technology companies like Microsoft and Amazon, alongside retailers such as REI, climate technology firms, labor groups, and 17 federally-recognized Tribal Nations. The initiative’s supporters included various trade associations
representing building, retail, and construction industries.
Washington’s capital gains tax, which survived a legal challenge that reached the state Supreme Court, applies to profits exceeding $262,000 for the 2023 tax year, with the threshold adjusting for inflation. The tax specifically excludes real estate transactions, retirement accounts, college savings, agricultural operations, and family-owned small businesses. Approximately 3,850 individuals filed returns related to capital gains this spring.
Both initiatives were part of a broader campaign led by Seattle hedge fund manager Brian Heywood and the Let’s Go Washington organization, which raised $9.5 million to support four ballot measures. The opposing campaigns demonstrated significant financial backing, with the No on I-2117 campaign raising $16.4 million and No on I-2109 securing $4.4 million in funding.
The rejection of these measures maintains Washington’s position as one of 42 states with a capital gains tax, while preserving its
distinctive tax structure that includes no state income tax or corporate income tax. The state primarily relies on business and occupation taxes, property taxes, and sales taxes for revenue.
The cap-and-invest program, which began operating in January 2023, will continue its mission of reducing greenhouse gas emissions through a market-based approach. Critics had argued that the program contributed to higher gas prices and questioned its effectiveness in reducing emissions, while supporters maintained its importance in addressing climate change and funding environmental initiatives.
The outcome of these votes reflects Washington voters’ support for maintaining both the state’s current tax structure for funding education and its climate action programs, despite arguments from opponents about economic impacts and concerns over rising costs for residents. The results indicate a clear preference for keeping these relatively new policies in place rather than returning to previous systems.