On May 22, community members including educators, child care providers, youth and education advocacy organizations introduced the No I-2109 campaign to stop the initiative from repealing Washington state’s capital gains tax.
When it went into effect in January 2022, the capital gains tax allocated $898 million to the Education Legacy Trust account, which provides funding to schools, child care centers and community and technical colleges, while also allotting those funds for future construction and renovation projects for educational institutions. The capital gains tax passed in 2021 and places a 7% tax on bonds and stocks that surpass $250,000. The tax currently applies to around 4,000 taxpayers in the state. Small businesses, retirement accounts, farms and real estate are all exempt.
No 1-2109 campaigners say the tax code is an answer to an alarming and long-standing problem that’s affecting many students, educators and families with children living in Washington. The average monthly cost for child care in King County is $1,044, according to ChildCare Aware of America. The Seattle Public School district is facing a $105 million budget deficit this fiscal year and in May 2024 announced the closure of schools with low enrollment as a way to lessen the gap.
Even though the tax code aims to address these issues, Initiative 2109 (I-2109) would reverse the capital gains tax. I-2109 has Brian Heywood, a hedge fund CEO, to thank for securing its spot on the November ballot. Heywood is quoted by the Seattle Times condemning the capital gains tax and saying that he disapproves of the way it was passed. Heywood has allocated $6 million to fund six initiatives, including I-2109. The other initiatives would, if passed, ban income taxes, dismantle the Climate Commitment Act, extend the window for people to withdraw from long-term care coverage plans and give parents more jurisdiction over which educational materials are taught in schools.
If the initiative does pass, $5 billion of funding will be eliminated from school districts throughout the state, according to the campaign organizers of No I-2109.
Invest in Washington Now is among the organizations that have endorsed the campaign against I-2109. The group’s executive director Treasure Mackley worked for 12 years to help pass the capital gains tax. Mackley said that while she wasn’t surprised to learn I-2109 made it on the ballot, she is frustrated by wealthy individuals’ efforts to repeal the tax code.
In January 2024, the U.S. Supreme Court rejected hearing a case that had the potential to revoke the state’s capital gains tax.
“That’s why Brian Heywood spent $6 million to try to repeal this — because he just simply doesn’t want to pay his taxes like the rest of us,” Mackley said. “We’re asking the very wealthy to step up to the table. This is their last-ditch attempt. The hard part of fighting folks who are at the very wealthy end of the scale is that they have a lot of resources at their disposal. People like Heywood aren’t afraid to spend that kind of money to take away resources from kids and families.”
Mackley said that if passed, I-2109 would not only pull away a significant amount of funding from schools and services, but it would also affect the state’s workforce, 15% of which is working parents. Eliminating the capital gains tax would cut off access to affordable child care centers — something that Mackley said would be detrimental to families’s incomes and only further escalate the existing child care crisis.
“This is something that’s a benefit to all of us, especially small businesses,” Mackley said. “Small business owners will tell you time and time again that one of the best benefits their employees can have is access to child care. If they’ve got somebody who is unable to make it to work because they aren’t able to access child care, then that’s a direct impact on small businesses, which is why they are in opposition to I-2109.”
Mackley also emphasized that the capital gains tax doesn’t affect 99.8% of Washington residents. The No I-2109 campaign is focused on educating local communities on what the capital gains tax is and why I-2109 will highly impact educational funding. Mackley believes both No I-2109 and the initiative itself are opportunities for the public to revisit creating more equitable tax codes that support working people, families, educators and students.
Kisha-Marie Schnereger is a working parent and a member of Moms Rising, another organization that has endorsed No I-2109. She was baffled to hear about I-2109 making it to the ballot and questioned why it even exists. Schnereger fears that the daycare her children attend will be severely impacted if the initiative passed. If her children’s daycare were to close as a result of underfunding, not only would it leave Schnereger scrambling to find an alternative child care program, but she and her children would lose their community.
Diana Llanes, a daycare provider who operates Once Upon a Times Bilingual Childcare, wrote in a Washington State Standard op-ed that I-2109 would hurt her small business, projecting she would lose half of her enrollment. Schnereger says she has noticed funding and providing competitive wages for child care workers has already been an issue for the daycare where her children are enrolled.
“My son’s [daycare] teacher left to go work in banking because she has to make money for her kids,” said Schnereger. “I wonder how many of the child care workers qualify for services. That’s backward. This is a career that takes skills and years of education. People who are willing to take care of other people’s children are angels. My daughter is singing her ABCs, and daycare is like school for her. Those are things that I can build on at home and not just be left solely to try to teach her while we work. What kind of price can you put on that?”
Since her family doesn’t qualify for assistance, Schnereger and her partner are also struggling to keep up with the cost of child care. Each week, they pay $680 to send their children to daycare; Schnereger’s partner has had to pull money from their retirement account to cover half of the cost. Schnereger was surprised to hear other parents within the Moms Rising cohort were paying even more.
If I-2109 fails to pass, Schnereger wants the Legislature to expand the capital gains tax to further curb the high cost of child care and protect services low-income families depend on.
“What really needs to happen is an honest conversation with the professionals taking care of our kids,” Schnereger said. “That way they can figure out how much funding is truly needed. [Legislators] need to shift their thinking beyond basic needs. I don’t believe they’re thinking about all of the things that it takes to run these facilities when [daycare staff] are paying for things out of pocket.”
Marian Mohamed is the associate editor of Real Change. She oversees our weekly features. Contact her at [email protected].
Read more of the June 5–11, 2024 issue.