Committee hears broad support and opposition for bill increasing capital gains and estate taxes to fund education

Senate Bill 5813 would increase funding to the Education Legacy Trust Account (ELTA) by raising some capital‑gains rates and changing estate‑tax exclusions and rates, Ways & Means staff told the committee before a lengthy public hearing on April 16.

Tianyi Lin, committee staff, summarized the bill’s three major parts: an additional 2.9 percentage‑point rate applying to capital gains over $1 million starting tax year 2025; an increase and indexing of the estate‑tax exclusion to $3 million and a change in estate‑tax rates (raising top brackets to as high as 35%); and retroactive application for estates of decedents dying on or after Jan. 1, 2025. Lin also summarized the Department of Revenue’s fiscal estimate: about $183 million in the first full fiscal year and roughly $680 million over a four‑year outlook, split between capital‑gains and estate‑tax changes. DOR estimated modest administrative costs and FTE needs for implementation.

A broad coalition of education, child‑care, equity and anti‑poverty groups testified in support. Eli Taylor Goss of the Washington State Budget & Policy Center, Tracy Underwood of the Economic Opportunity Institute, Kristen Eng of Faith Action Network, Annie Michelle Jean‑Pierre of Children’s Alliance, and representatives of the Washington PTA, Statewide Poverty Action Network and universities urged the committee to adopt the bill to stabilize funding for K‑12, early learning and higher education. Testimony often cited the November vote that upheld the capital‑gains excise tax and polls showing public support for expanding it.

Teacher Kerian McMichael told the committee the bill “asks those who are doing extremely well to chip in a little more.” University faculty and system representatives said the proposed revenue would protect higher‑education funding and financial aid.

Opposition witnesses included small‑business advocates, some conservative speakers and individual residents who argued higher capital‑gains and estate taxes would drive businesses and wealthy residents out of state. Patrick Connor of NFIB urged alignment of small‑business deductions across estate and capital‑gains rules, arguing qualified family‑owned business interests should be adjusted. Business and conservative witnesses warned of reduced competitiveness and mobility of capital.

Why it matters: Staff provided concrete fiscal estimates and DOR implementation costs; proponents framed the bill as progressive revenue to meet education and social‑service needs, while opponents argued economic harms and urged protections for family‑owned businesses. The committee took hours of public testimony and did not act on the bill during the hearing.

The committee asked witnesses to submit amendments and follow‑up material before further action.