PORTLAND, Ore (KOIN) — The Washington State Legislature approved tax reform legislation that would enact a capital gains excise tax to fund the expansion of affordable childcare and education, state officials announced Sunday.

Senate Bill 5096, sponsored by Sen. June Robinson (D-Everett) passed the House on April 21. The bill imposes a 7% tax on high-end assets like sales of stocks and bonds worth more than $250,000 for both individuals and couples.

The bill now awaits a signature from Gov. Jay Inslee.

Revenue from the tax would go toward the Education Legacy Trust account. These funds would be capped at $500 million annually. Additional revenues would go toward the Common School Construction Account.

The final bill also now includes a “charitable donation” deduction for taxpayers who donate at least $250,000 to a qualified nonprofit.

“This important step to rebuild our unfair tax code was taken after years of work, years of dialogue, and thousands of voices calling for this policy,” Robinson said. “We’ve heard that people from every part of our state are ready to move toward a healthier, stronger future together, and it’s time for the wealthiest among us to pay their fair share for that future.”

The Department of Revenue estimates the tax would generate approximately $500 million per year. Around 7,000 or 0.2% of all taxpayers in the state, mainly the wealthiest, would be affected.

But some argue that implementing a new capital gains tax will only hurt Washington’s competitiveness.

“At the least, employers needed lawmakers to do no harm after all they have been through in the past year,” Kris Johnson, president of the Association of Washington Business said in a statement remarking on Washington’s legislative session.

“Washington state has led the nation in tax revenue growth since the start of the pandemic and billions of dollars in federal COVID relief are pouring into state and local governments. Despite this, lawmakers voted to enact a capital gains tax on Washingtonians for the first time, a move that will hurt Washington’s competitiveness and put us on a path toward a statewide income tax, something voters have repeatedly rejected. Proponents of the new tax argue it will make Washington’s tax system more progressive, but there was no equivalent reduction in sales tax or business and occupation tax to help struggling employers. It’s simply a tax increase at a time when it wasn’t needed,” he said.