Former Labor Secretary Reich joins Councilmember Lewis & others to discuss capital gains tax

and introduce you to Professor Reich.

So Bob, Professor Rankin is a law professor at Seattle University.

She's the director of the Homeless Rights Advocacy Project there and just a great local leader here for coalition building on getting more of our on-house neighbors into permanent supportive housing.

So just wanted to take a moment to introduce you guys.

Terrific.

Thank you.

Thank you.

Okay, thank you so much.

So welcome, everybody.

It looks like we've got about 86 attendees so far, which is great.

And I expect more folks will will come in as we go along.

But since we're two minutes after two, I figured we get started in in respect for our panelists time.

My name is Andrew Lewis.

I'm the Seattle City Council member for Seattle City Council District 7, which stretches from Magnolia down to Pioneer Square, South Lake Union, Queen Anne.

downtown, Belltown, and other neighborhoods in sort of the western side of the city of Seattle.

Elected in 2019, currently in the first very eventful six months of my four-year term, and could not be more excited to represent the people of District 7 and to work alongside a lot of the great community members that are joining on this call.

Just to give people a brief roadmap of kind of how I'm structuring this, So this is a town hall about a proposal that I floated last week to tax capital gains, well, I guess two weeks ago, to tax capital gains in the city of Seattle to fund permanent supportive housing and the plans of the Third Door Coalition, which is an alliance late this spring or early this spring of business and service providers that came forward With a plan to get 6,500 new units of permanent supportive housing above and beyond what is currently planned for to to really help with our regional efforts to reach functional zero on our neighbors living in a state of chronic homelessness.

So this town hall is going to have sort of three sections to it.

First, at the top, I'm going to talk to a really special guest that I'm very pleased to have here, my old professor from the University of California, Berkeley, Professor Robert B. Reich, former United States Secretary of Labor and and a noted and avid progressive economist is joining us today to talk at a very high level view about capital gains, kind of where they come from, what they are, why it is equitable and progressive to tax them, and why that is the source of revenue that governments can use to reach equitable and progressive ends through policy.

and I'm very happy to have Professor Reich here.

And that'll be the first part of the discussion.

I'll just talk to Professor Reich and he cannot stay for the entire time, but I'll have a good conversation with him and we can queue up some of your questions and I can field them later if Professor Reich has already left at that point.

But that'll be the first part of the town hall.

Second part of the town hall, We're going to be talking to a panel, and I'm really proud to be joined by three extremely amazing community members that I've had the great pleasure of working with prior to taking office and during my time in office.

Senator Joe Wynn, who represents the 34th District, West Seattle, you know, Vashon Island, White Center, and other parts of King County, who has been a champion of capital gains in the state legislature, and really happy to have him here to talk about his efforts down there and how we can sync up our efforts in Seattle and Olympia to have a more progressive tax system in Washington State.

Executive Director Colleen Echo-Hawk of the Chief Seattle Club, who is an expert in permanent supportive housing and a service provider who does great work in the Pioneer Square neighborhood and beyond here in the city Seattle who can talk about the merits of permanent supportive housing and how we can use a scaling permanent supportive housing as a strategy for equitable and very social justice and race conscious investments that are righting historical wrongs and making sure that we are on the path to being a more equitable city and how we build out our social services.

And she can be joined in that conversation by Sarah Rankin, Professor Sarah Rankin of Seattle University School of Law and Director of the Homeless Rights Advocacy Project at Seattle University and a board member of the Third Door Coalition, an alliance of service providers and small business leaders who have been advocating for scaling up permanent supportive housing to reach functional zero and homelessness on chronic homelessness.

So with that, I'll transition to the first part now that we have the roadmap.

And after those presentations, we will leave time for questions that will be moderated by Camille Brown from my staff, who is also on the call.

And I think that with that roadmap, I'll pivot now to talk to Professor Reich about on capital gains generally.

So first off, Bob, welcome to the city of Seattle, even if virtually.

It's good to see you.

Just as a little bit of background, when I was in law school at UC Berkeley, I had the great privilege of being both a student and a student instructor later for Professor Reich's class, Wealth and Poverty.

A big portion of that class, which was formative in shaping my views on tax policy, was this discussion about how local governments, of which I am now an elected officer of a local government, are more overly dependent on regressive taxes than any other level, generally, of government.

And also, paradoxically, we do most of the governing here at local government and have a big caseload of what we need to provide for, mostly through, especially in our case, sales and property taxes.

A big part of Professor Reich's course talked about different taxes that are out there in the world, and how those taxes have a tendency through policy over the years to be lowered, reduced, loopholes to be created, and that that has very regressive and inequitous consequences.

I'm just to provide a little background on sort of my, my history with with Professor ration it's good to see him here to have this conversation about stuff that I know he he's a great authority on and it should be a really good town hall so.

Um, Bob, I guess, uh, I wanted, I'll throw out a first question and then feel free to, you know, to preface it with, you know, with an introduction, introductory remarks or, um, uh, uh, sort of other, um, other formalities before answering, but I'll throw out the first question, um, just to start it way up at the, the 30,000 foot level.

Um, what are, uh, capital gains?

Well, I will answer that question at 30,000 feet and at 10,000 and at two feet in just a second, Andrew.

But let me just thank you for inviting me and thank you for initiating this proposal, this series of proposals.

You were one of my best students.

It was about 30 years ago, I think you were in my class.

And I remember saying to you at the time, I hope you go on into politics and do something that is very much comes out of this class.

And you said, sure.

And then there you did.

You went back home and you ran for city council.

And I thank you for that.

And Senator Nguyen, it's very, very good to see you again.

I've seen you and met you before in Seattle.

And Ms. Echohawk, is that right?

Thank you for your very, very important work.

Keep it up.

I mean, if there was ever a time in our nation's history when we needed people like you to do what you are doing, it is absolutely now.

And Professor Rankin, it's awfully nice to see you.

I apologize in advance.

I'm going to have to leave probably before most of the panel does talk.

But let me just say some things about taxes and specifically capital gains taxes, because I know people's eyes glaze over when you talk taxes.

And especially when you talk something like capital gains taxes, people's eyes really glaze over.

But the irony is that it's very important that you know this stuff, because it is at the heart of our dilemma.

It's at the heart of the problems that we are facing in terms of trying to have a just society.

It's hard to do what we need to do in society unless we have a tax system that finances the things we need to do.

And you know this in Seattle.

I mean, there is a crisis of affordable housing.

That crisis of affordable housing, and it's not unlike the crisis in the Bay Area where I am now speaking to you from, is not just accidental.

It doesn't just happen out of nature.

It's not something that happened because no one paid attention.

It's something that actually was intentional and is intentional in certain very important respects, and the tax system is a big part of it.

Capital gains.

Here it comes.

Are you ready?

Everybody ready?

I'm going to quiz you on this later on.

Capital gains.

That's the difference between The value of an asset, whether it's a house or a car or a piece of art or anything else, the value of that asset when you buy it and when you sell it, that is called a capital gain.

When the value goes up, And most values go up.

I mean, even in a recession, housing values around the country continue to rise, and so do the values of all sorts of other assets.

When those values rise, that is called a capital gain.

And capital gains are very important in our society, particularly to the rich.

Something like two-thirds of all capital gains in the state of Washington are claimed by households earning $1 million a year or more.

I'm not saying that they were taxed on it.

I mean, they just, they get capital gains.

Who are the people who get capital gains?

They are rich.

The people who get most of the capital gains are very rich.

The people who claim and get almost all of the big and important prominent capital gains in our society are super rich.

The reason that, for example, Warren Buffett, one of the richest people in our society, in our land, says that his secretary pays more taxes than he does is because capital gains are taxed at a much lower rate.

And it's easy for wealthy people to never pay capital gains taxes.

Even if there's a capital gains tax, federal capital gains taxes, they can pass their money, their assets onto their children and heirs without ever paying taxes on those capital gains.

and yet capital is a source of income for the wealthy like it is for nobody else.

The other thing I want to just say is that this also bears on race and it bears on poverty.

I mean the median value of household assets among white people in the United States is 17 times the value of assets for Latinx households and 13 times the value of assets for Black households.

In other words, and this is partly because of history, history of redlining, history of discrimination.

One of the most important Assets that anybody has is a house, obviously.

And if you've been squeezed out of the housing market for a variety of reasons, you don't have any assets.

You don't have resources.

And that's one of the biggest explanations for the gap between black and white assets, wealth.

The other thing that's important to point out is that in Washington State, the poorest fifth of households pay an average of 18% of their incomes in taxes.

I'm gonna say that again because I know there's a lot of numbers floating around here, but I'm gonna say it again.

The poorest fifth in Washington State pay an average of 18% of their income in taxes.

The richest 1% in Washington state pay an average of 3% of their income in taxes.

We're talking about state and local taxes.

Washington state, and I say this with great fondness for the state of Washington.

I get up there whenever I can.

Pre-COVID-19, I was up there all the time.

The Seattle Town Hall, I practically lived there.

But let me just say that Washington State has the most upside down tax code in America.

I mean, it is worse, more regressive, harder on the poor than even in Mississippi.

And when last time I looked, the state of Washington was a pretty progressive place, a pretty blue place.

The tax code is a an abomination.

It is a scandal.

Bob, can I jump in on a second there?

Because I think that is a really important point to make.

And I always remember You make your students guess when we talk about regressive taxes in your class, which state is the most regressive.

No one ever guesses Washington.

And that was always sort of an unpleasant part of the curriculum, and that would come up, as I remember.

But I want to pivot a little to talking, getting a little deeper into capital gains, and really start talking about stocks and stock options.

and like how that interfaces with the Capitol Games world and also with sort of a history of how executive compensation has been done since the 90s in the United States at a much higher level.

You know, one of the really great parts of your documentary, Inequality for All, is touching on this that, you know, that it when there was sort of like a tying of CEO performance to the performance of the company in terms of compensation, there was a trend to seek a loophole, right, to like put capital gains in as the compensation mechanism.

And I just wanted to talk a little bit more about that, because I think it is important, just so everyone kind of gets a sense of how how there is just this big concentration and the disparities you just mentioned about how regressive Seattle's tax system is, that that 3% number is partly due to the fact that we are in a state that taxes capital gains.

And just wanted to maybe pivot it to stocks a little and kind of talk in that world.

Yeah, well, that's right.

I mean, I will get to stocks in just, I want just to finish this thought, Andrew, and that is that you've got a sales tax And that is sales taxes are very regressive.

The poor pay much more of their incomes because of sales taxes.

But at the other end, Washington state is one of 11 states that doesn't have a capital gains tax, doesn't tax significant profits from the sales of stocks and bonds and other big assets.

And that's a big, big deal right there.

When I talk about capital gains, the biggest, biggest resource that people have, most people have their wealth, if they're wealthy, in stocks and bonds.

And if you're not paying capital gains at the top, particularly very, very wealthy people, that's the biggest loophole that exists.

It is a giant loophole.

I don't want to get personal because I've never met Mr. Bezos, but the last time I looked, he was the richest person, one of the richest in the world, certainly in the United States.

And he had something in the order of 11% of the shares of stock of Amazon.

Well, you know, you have a lot of stock of Amazon.

If you have, if you're one of the biggest shareholders of Amazon, every day, you are getting richer and richer and richer.

And none of that is subject to capital gains in the state.

And you're getting whatever you, you know, you can sell a part of it, you can do anything you want.

But if there's no capital gains, you can, you can live a pretty good life without essentially paying any taxes.

Yeah, no, and I appreciate you bringing that up just because, you know, we we do in the state of Washington have actually a pretty large concentration of billionaires here in our county, in King County.

All three of them.

Right.

And like, again, I'm not saying anything to to be disparaging.

to any of the billionaires in King County.

But all three of them do make a, I mean, the reason they're billionaires is it's reflective of their holdings of stocks and bonds, and that is sort of the foundation to their wealth, and it is taxed at a very different rate.

So I guess pivoting just a little bit to talk about what the impact would be.

If Senator Wynne and I are successful and we pass capital gains regimes in Washington state, does that make a tax system more or less equitable, and how so?

it makes it far more equitable for all the reasons that we've talked about.

That is, the people that have most of the resources in Washington state or in the United States are very, very rich and they hold their money, their wealth, in mostly shares of stocks and bonds.

And billionaires in this pandemic have increased their billion wealth by something like $353 billion just so far.

And again, I don't want to pick on Jeff Bezos.

I'm sure he's a very nice man.

But his wealth has gone up dramatically over the past three months.

Most everybody else is barely holding on.

We've got 43.5 million Americans who filed for unemployment insurance.

I mean, the gap is outrageous, and the cost of housing is one of the biggest problems that people face.

And so it would only be just logical if you care about anything that is both fair and also good for the economy.

This is not just fairness, this is also good for the economy because if it means that average people have more money in their pockets because they can afford housing, that's good because they can spend more for everything else.

That's critically important for your economy.

This is not just a matter of doing good and being fair.

It's a matter of just economic principles, understanding that the economy would work better if more middle class and working class and poor people had more money in their pockets because housing was not as expensive as it is.

So let me dive into that just a little bit deeper and maybe phrase it this way.

What do you say to critics?

Because, you know, there's a lot of folks out there, not only in Seattle, but a lot of other jurisdictions that are saying, look, we're going into a recession, maybe a depression.

Why is this the time to raise any kind of tax?

Like, why would you raise capital gains taxes or even institute one in a recession?

And saying, you know, like a line of argument that, I mean, I don't agree with it, but I want to hear your response, that by imposing a tax like that is going to somehow hamper recovery.

It's going to delay recovery.

How would you respond to, like, is a recession a good time to institute a capital gains tax?

A recession is the best time because what we know about recessions is that people at the top don't get hurt by recessions.

In fact, they do very well often.

That's exactly what's happening in this recession.

People at the top are doing better than ever.

It's people who are working class and poor and lower middle class who are getting shafted.

And they need services.

They need social services.

They need educational services.

They need all sorts of services that states and locales provide.

And yet the states are going, are running out of money.

The locales are running out of money.

There are no tax money coming in from many people.

Sales taxes are down because people don't have any money to buy things.

I mean, you don't have to be a rocket scientist to see that if you tax people who are doing better and better, it's a small group at the top.

They are doing extraordinarily well in order to finance services that everybody else desperately needs.

your economy is going to do better because people then have more money to spend.

They don't have to worry as much.

They have childcare, they have daycare, they have education, they have social services, they have unemployment insurance, they have all the other things they need to survive on.

That's good.

Again, I want to stress this is not just a matter of fairness.

This is a matter of smart economics.

Yeah.

So, you know, by making some of these investments, using capital gains, there's sort of a multiplier effect to the recovery as well.

Just a huge, a huge, and I want to, the multiplier effect is a kind of a technical term.

What it really means is that when you put a dollar into somebody's pocket, if they are low income or lower medium income, they are going to spend that dollar.

If you put a dollar into somebody's pocket who is a billionaire, they are not going to spend it.

They're going to save it.

They're going to put it into a work of art or buy another mansion in another place around the world, or they're going to put it into stocks and bonds.

They're not going to spend it locally.

They're not going to spend it in the state.

And that's why it makes so much more sense to put a dollar into a person's pockets who are people of moderate means or low income.

And let me just ask you, this is sort of a technical question, but I think it's pretty universal across all the jurisdictions, federal and state, that do capital gains currently.

You know, like if you own an asset, right, because this is something that I've gotten a lot of feedback on from the community where there's some confusion.

So like if you own a house, right, or you own stocks and bonds, you're not taxed purely on the ownership of those assets under stocks and under capital gains, correct?

No, of course not.

No, you're, you're taxed only when you sell them and what your, your proposal as I understand it exempts retirement accounts and the sales of homes.

And, and so, well, you know, you're not you're not really hurting anybody, or at least you're not hurting.

middle-income and lower middle-income and working-class people.

No, you're really focusing where you should be focusing, and that is on very, very wealthy people who have never done better, and you're not penalizing them.

You're just saying to them, pay your fair share.

And I got one last question on this.

And then I might actually turn it over to the panel if anyone here has a clarifying question or two for Professor Resch before he has to leave.

But we've talked a lot about how there's a very inequitable distribution of the assets taxed under capital gains by race.

uh that you know white households um hold a lot more capital gains taxable assets than um than black um latinx or um native american households um but i wanted to ask too um what about generationally uh like in terms of capital gains like um you know how how are capital gains assets distributed because i know a lot of you know, people in my peer group, a lot of millennial peer groups, are having a hard time getting into being sort of a property-owning sort of generation just because of how expensive a lot of assets are and that there's a lot of barriers to entry and we tend to be very debt-laden.

I'm just curious if you know, like in terms of Yeah, I guess unless you're Mark Zuckerberg, I guess, is a millennial, but you know, him aside, he was doing quite well with capital gains.

Yeah, a generational divide.

Yeah, there's a huge generational divide, Andrew.

I mean, boomers, baby boomers, of which I am one, we have a lot of assets relative to millennials and Generation Z. And that's partly because we've been around longer, we've earned more, but those of us who are fortunate enough to have amassed quite significant wealth, we are doing better than any generation before in terms of amassing that wealth.

The top 1%, the richest 1% of the baby boomers have far more wealth than the richest 1% of the millennials.

But here's the thing you wanna focus on.

When the baby boomers retire and they either die or they give their assets through a variety of vehicles to their heirs, They pay very little taxes and the heirs pay very little taxes.

And so most of those capital gains go untaxed.

And these days, that means you have the beginnings of an intergenerational, what can we call it, an oligarchy, an aristocracy?

I mean, we haven't seen anything like this since the later days of the 19th century in terms of something in the order of $40 trillion.

are about to be transferred from wealthy baby boomers to millennials, wealthy millennials, because they're the children of wealthy baby boomers, without ever being taxed at all.

I mean, this is the biggest loophole in history, and we are just on the precipice of the loophole.

In fact, you can look into the loophole.

From where you're standing, you can look down into a bottomless loophole.

So it becomes even more important that you guys get on with what you are trying to do.

And I salute you for it.

I'm going to have to leave, but please do keep at it.

This is really important.

And even though the topic sounds boring, it is not boring.

It's the key to the future of Seattle and the state of Washington.

Well, Bob, thank you so much.

And thanks for being so generous with your time this afternoon.

It looks like our attendees have spiked to 119 attendees on a Tuesday afternoon, which is great.

So thank you so much.

Really appreciate you taking the time here.

And I hope to see you in person in some post-COVID world where we can get together in person again.

I hope so.

I hope so.

I'm counting on that.

Either down at Berkeley or up here.

So great.

Really appreciate it.

Thank you for joining us.

OK.

Thank you.

And good luck to all of you.

Cheers.

Okay, so folks, with that, I want to pivot and really start getting more down into the details here about the direction of actually crafting some kind of tax in Washington State on capital gains.

I want to kind of go into this panel discussion here by just kind of flagging at the outset that I have not formally introduced at the city an ordinance yet.

I'm still in the process of crafting one.

And I just want to say that that process, and kind of introducing the, you know, to kick off the panel here, talking to Joe Nguyen a little bit, has been informed by the legislation that Joe Nguyen and others have been working on down in Olympia that creates what's called an excise tax, which as Professor Reich was talking about, all of these capital gains taxes are taxes on transactions.

It's not a tax on having a house, that's property tax, and it's not a tax on holding stocks, It's a tax capital gains as envisioned in Olympia and envisioned in the legislation I will eventually introduce is a tax on that transaction.

Once you sell that capital and then the profit that you've made versus what you spent to buy whatever that property is, be it capital gain from stock or from a house or whatever.

Senator Wynn and my efforts are pretty aligned.

We're envisioning the same exemptions at the state and local level.

But I want to turn it over to Senator Wynn, who's been patiently waiting to jump in on this.

It's an honor to hear from Robert Reich.

And just turn it over and give us an update on what the bill under consideration is in Olympia and what it does, how it's structured, and how we can kind of partner with our efforts here to have a more equitable system in the state of Washington.

No, first off, again, thank you so much for having me.

And Sarah and Collins, always great to see both of you as well.

I think the biggest thing that we're trying to address, even agnostic of the proposals themselves, is the fact that we want to invest not just in a budget that's whole, but an economy that serves all of us here in Washington state.

And we've talked at length about how the regressivity really hurts, uh, you know, lower income or middle income families.

And that manifests itself in many ways.

Uh, if you look at our last recession, uh, we made it basically an all cuts budget in Washington state.

We didn't raise any revenue.

We didn't have a capital gains proposals or anything else.

And then during that time, we let exemptions for large corporations kind of exist through that whole process.

And you saw a higher concentration of wealth.

So during the exact same time, we see tremendous growth in billionaires in Washington state.

We also saw some of the worst issues around affordability and homelessness at the same time.

So the inequality that we're experiencing is a symptom of our regressive nature.

And then being able to close that gap with capital gains is one of the proposals that can make us whole.

So the various proposals that you'll see, and Andrew, we've been talking about this as well.

Obviously, we wanna make sure that this affects larger income folks who have been very successful in the game of I would say capitalism and they're doing just fine even if it was a recession.

We do not want to touch anybody's retirement accounts nor their primary homes and there were versions at the state level too that would have exempted percentages of a person's business because oftentimes your livelihood depends on that to exist after you retire.

So the goal was to make sure that it was the most equitable possible And the thresholds were fairly high as well.

So even if you were to sell some, uh, stock and you'd realize some gains, uh, you'd have to realize a lot of gains.

Uh, you know, the, the smallest I saw was 50,000.

So not selling just $50,000 worth of stock, which by itself is a lot of money, at least for somebody like me. that will just be the gains on that as well.

So even if you were to sell, and we're lucky enough to have gains on potential stockholdings that you may have, you're likely gonna be exempt from this proposal.

So this is only for the ultra wealthy.

And I believe by closing this gap, the important part that we're talking about is that we invest in our communities.

So Sarah's talked more about our homelessness sectors, but we invest in our education, we invest in our healthcare, We invest in the future of Washington State, and that's how we have a more equitable society where everybody gets to participate in a meaningful way.

What's interesting, my background is actually in finance and economics for my degrees at Santa University, and I worked in finance after the fact and saw firsthand how some of these folks are able to maneuver and not have to pay the same rates as other folks.

And one of the things that kind of came to mind as we're talking about these proposals is that sometimes when you're used to privilege, equality feels like oppression, right?

So a lot of the pushback that we're getting Why would you try to raise taxes during this time?

Well, we've been raising taxes on middle class families for so long.

We need to close this budget shortfall because we can't afford to have a lack of funding for social services and for affordability.

And there are people who are doing very, very well.

And this is not meant to be punitive, or this is not a discussion about morality.

This is literally an economic argument that we are all better when we have consumer demand that meets the needs of small businesses, of large corporations.

Even the billionaires themselves have workers who work for them.

And they'd be better off if they had workers who were whole and able to be stable to work.

So to me, the proposals themselves are numerous, but the main goal that we're trying to achieve is having a balanced economy that serves the people.

People should come before profits and our tax structure should reflect that as well here in Washington State.

So Senator, just a couple of follow-up questions too, and thank you so much for that presentation and just all the great work that you're doing for a more equitable tax code.

I did just want to ask in terms of getting some of the details out, because I really think it's important for us to be front and center with the messaging on what this truly is.

We scored just to kind of see if it was flat.

capital gains tax I put forward is not going to be a flat one.

I mean, like the state one, you're going to have to raise above a certain threshold.

But we started off saying, well, what if it was flat?

And even if it was flat, I mean, only 30% of people in the city of Seattle would pay it, which automatically 70% wouldn't.

Still a large number, but much better than sales tax, which everyone pays.

I guess my question would be, when you hike up those exemptions, where it's like, you know, 50, the 50,000 hurdle that you mentioned, like how many folks are we really talking about that ultimately pay this tax?

Because I do think that is an important part of the messaging is just being able to tell people like, look, you know, because there is a lot of inequity in how capital gains are distributed, it really does tighten up the universe.

So I just want to kind of talk about.

It's always more important to discuss Actually, who pays or who doesn't really pay?

And obviously, the various proposals had different thresholds.

As we were considering some, we'd had staff look at potentially where it would be coming from as well.

And in Washington State, at the thresholds we were talking about, so above, say, for instance, $50,000 or $100,000, and retirement accounts don't count, primary homes don't count, your businesses don't count up to a certain amount.

There were numerous counties in Washington State where they had actually had nobody that would be paying it.

because they wouldn't reach that threshold.

Or I think Clark County had like one person, right?

So obviously the majority of the folks would come from the Puget Sound area.

And it's the irony there is that the folks who won't vote for it are gonna be legislators from the counties who aren't actually impacted by this.

So the interesting thing too is, as a proposal, you have the economic impact, which obviously is important, but even the political side of it, the people who are likely to pay for it, so those in King County and Puget Sound area and obviously some other parts, they actually are the ones who are asking for something because they understand that they should be paying a part of this recovery itself as well.

So depending on how it's structured, obviously it would be, you know, you know, fractions of a percent of people here in Washington State And only those, as we had talked about, would be making likely over a million dollars or worth at least over a million dollars per year.

And again, candidly, having worked in finance, the folks who are paying this, it's only because they've exhausted every other loophole that they had access to.

So Professor White mentioned it earlier.

There are numerous ways to not pay anything.

So even exhausting all of those, then they have a little bit of liability that they'd be then paying for the state.

So it's kind of an interesting dynamic where you have a really complex system that was set up to be unfair, as you had mentioned, the origins through executive compensation.

And again, the vast majority of people, especially those middle and lower income folks will not be impacted.

And there's racial disparities associated with it as well.

I don't have the numbers off the top of my head, but obviously racial equality is important all the time, but especially right now, I don't think there are, I think the vast majority, I would candidly say are probably generally older white males and the benefits and the programs that we're gonna be servicing by having these resources to invest in our state are gonna go towards communities, BIPOC communities across the state as well.

So, you have the economic argument, you have the political argument, but this in terms of morality, when we talk about how do we have actual equity and justice in our society, this is one of the key pieces of it.

And Joe, that's an excellent, sorry, Senator Wynn.

I don't want to get too.

We're friends.

I do want to pivot.

I think that's a really great pivot to start talking to Colleen and Sarah a little, because I think half of it, half of the equation is, can we have equitable taxes?

And I think the other half is, what do we do with that revenue once we get it to, I said earlier, a multiplier effect on equity, right?

But I think it is really important that it's not just enough to have equitable taxes, you also have to invest in equitable policy intervention.

So I want to transition and then loop in the whole panel up to Colleen and Sarah about this.

And just to sort of set the table a little bit on it, I think that it's never been, you know, I've never seen a six months of American history, you know, in my lifetime that has more queued up all of the different intersections of what we need to be doing at a particular moment.

And I was talking to someone the other day about this, that it's not gonna be enough that we rise to meet the goals that Third Door has laid out.

And for those who are watching at home, the Third Door Coalition has put forward a proposal for 6,500 additional units of permanent supportive housing.

So in addition to everything else in the pipeline, to meet our goals, to provide enough permanent supportive housing for what our anticipated future demand is gonna be for people that are living chronically homeless.

They've done a lot of great assessment and analysis of the massive caseload savings that can be realized through something like that in terms of, you know, a third of the cost of jail, you know, like a fraction of the cost of emergency rooms.

And that people that are chronically homeless have traditionally, you know, I mean, to use like a really bureaucratic term, just high utilizers of those caseload systems.

But I think this is where the really big intersection really comes, is it puts front and center just the glaring racial and social equity challenge that we face with chronic homelessness.

and that our intervention and our challenge to address the problem needs to rise to the scope of that challenge.

And I think we've got a lot of great examples in recent history where we in Seattle, King County, have made really good progress on some big policy areas, but still had massively inequitable results.

You know, we have the second lowest youth incarceration rate in America, and we should be proud of that, that we incarcerate youth at a much lower rate than other jurisdictions.

But average length of stay has gone up for young people.

The percent of people of color who are incarcerated of the smaller group has gone up.

So inequity has gone up as total population has gone down, which tells me that we're really good at not putting white kids in jail when we put our mind to it, but that those inequities still persist.

for people of color in our community.

You know, I think that we see it manifested in lots of other places.

Police use of force since the consent decree is down, but it's still stubbornly very high.

for people of color who are victims of force from the police.

So as we get into this work now with permanent supportive housing, I am really excited to queue up for introducing Colleen and Sarah to start really talking about the fact that we have this great opportunity now in this moment to tax capital gains, which as we've discussed, overwhelmingly held by rich white men.

and use those resources to drive equity-driven conversations in scaling up, expanding, and protecting permanent supportive housing to get folks inside and in a way where race and social justice is centered so that we don't repeat our recent history of addressing these social problems, but not centering equity and leading to inequitable results.

So with that, I want to turn it over.

I know I've introduced them a number of times, but just to remind the audience, Professor Sarah Rankin, a law professor at the Seattle University and the director of the Homeless Rights Advocacy Project, and a co-chair of the Third Door Coalition to scale up permanent supportive housing.

And then Colleen Echo-Hawk, executive director of the Chief Seattle Club, an operator of permanent supportive housing, transitional housing, and other services for chronically homeless individuals, both experts that can delve in and talk a little bit more about this, because I don't think it's enough to, it's not a plan to propose a tax.

You know, the tax is a means, but we got to talk about the ends now.

So let's talk about permanent supportive housing.

So why don't we start with Colleen first, and you know, a lot of folks in the community you know, they hear permanent supportive housing, but they don't know, like, are you talking about tiny house villages?

Are you talking about scatter site?

Are you talking about, you know, housing integrated into a hospital?

So, like, I want to start from you first as an operator.

What is permanent supportive housing?

Yeah.

Well, thank you so much, Andrew.

And I just have to say that I appreciate the Secretary's comment on like this could be a boring topic, but it's been fascinating.

I've learned a lot and feel really excited to share a little bit about the importance of permanent supportive housing in our community.

And so the idea that For us in the Native community and the Chief Seattle Club and the Coalition to End Urban Indigenous Homelessness, permanent supportive housing is a way to bring in our folks who've been suffering for a very long time of chronic homelessness and bring them into shelter and security.

That is permanent.

And I think that's a very important part of understanding permanent supportive housing.

We're not talking about tiny villages or other non-permanent housing, but we're talking about housing that is permanent.

We're also talking about housing that has services attached to it.

So housing that understands the incredible trauma that our folks who've been experiencing chronic homelessness have, that's happening with them.

It's ongoing trauma.

And so we're going to have to address that if we want to bring them into um security and and out out from um living out on the streets and so um the chief seattle club has been operating um eagle village which is a psh light um housing we call it um and this has been incredibly successful for our community um one thing i'd like to talk like to remind us all is that even within our homeless housing systems, racism and discrimination continue to plague the BIPOC communities.

And so it has been very important and I love to give big props to the executive and King County because we took a risk to understand that the Native community who experienced the highest rates of homelessness in our country and in our county should have a place that is for them to address those very specific needs.

So our PSH is excellent, it has to be done, but it also has to come, we have to think about it with an anti-racist lens in order to be successful.

I am really grateful that we're having this conversation.

We have to build more PSH that is anti-racist in our system.

And we have to ensure that we're breaking down the structural racism that keeps people of color out of PSH as we move forward.

And Colleen, I'll stick with you just for a second to flesh that out a little bit more because I think it's an extremely important point and it needs to be centered.

And I think Chief Seattle Club has been a great model of interventions that are successful in breaking that down.

I wonder if you could just talk a little bit more, too, about some of the policy interventions that myself, my colleagues on the council, and other local leaders could use to start really putting rubber to the road on making sure that we're focusing on this work in that way.

The number one thing I think for us right now in King County and the city of Seattle, especially with everything that isn't happening, is to fund POC-led organizations.

If you think about our entire system, our system has been set up mostly by white people for white people to succeed.

And that goes for our homeless system.

And I know there's incredible, amazing white allies and co-conspirators who are behind this, but they do not truly know the pain and the trauma of our community, and they don't know the cultural solutions to help solve for BIPOC homelessness.

And when I say BIPOC, I mean Black, Indigenous, and people of color.

And so that is the number one thing I can think of right now, is to be funding the Urban League, and be funding Africatown, and be funding United Indians of all tribes, and that is an equitable response.

If we continue to fund white-led solutions around homelessness, we will not find the solutions to homelessness.

And so I believe that when we're thinking about, you know, effective solutions, that is just one of the ways that we can be effective.

And when I say this, I don't mean any kind of ill will to any of our white-led organizations.

They've been doing an amazing job and have in fact been doing it, you know, remarkable in centering race and equity.

But part of the way that we center race and equity and part of the way that we find effective solutions is to do it through POC-led organizations.

Yeah.

And I think that that's really good feedback too, in terms of when we come up with sort of a dedicated spend bill like this, right?

Like kind of baking those values into like when we're doing RFPs, like how are we prioritizing them, right?

In terms of where the money's going.

So I appreciate that.

So Professor Rankin, moving on to you and then we'll open up the panel a little bit more here for questions as well.

I wonder if you could talk a little bit more about kind of the overarching goals of like Third Door Coalition, what is Third Door Coalition, and just more about like how you came up with the goals and just how the third door kind of framework and the third door plan can really, you know, make a big substantive difference in chronic homelessness in King County.

So a broad question, but I think important to hitch up, you know, this tax proposal to like, you know, what will we, the people of Seattle King County be getting if we do pass a tax like this?

Thank you, council member.

And I want to thank you for your leadership.

And thank you, Colleen, for I really appreciated your contributions.

And it's always exciting to be talking with both of you.

So you asked about what the Third Door Coalition is in terms of a very quick overview.

I can give that to you, but you can also go to thirddoorcoalition.org, which is our website.

It has all the information that you could possibly want and then possibly more than you'd want to have.

But we are an unlikely alliance.

We call ourselves an unlikely alliance because we're very focused on trying to bring together people who seem like they would have divergent interests and to show how they're convergent, particularly around the question of how we can work together to solve unsheltered chronic homelessness.

And so our coalition has spent the last two years analyzing what it would take to dramatically reduce our chronic homeless population through bringing supportive housing to scale.

We conducted two analyses.

First, we did a needs assessment to determine the gap between the existing supportive housing stock that we have in our area and what the need for it is.

Then we conducted a cost driver analysis to identify what the biggest drags were on cost and time to construct permanent supportive housing so that we could more effectively bring it to scale.

And so based on our analysis, we determined that at least 6,500 people suffer from unsheltered chronic homelessness in King County.

That's about twice the number of prior point in time count estimates.

And we think there's many compelling reasons to be prioritizing our response to unsheltered chronic homelessness.

And it's important, I guess, to sort of spend a second just saying, I think a lot of folks don't know the difference between homelessness generally and chronic unsheltered homelessness in particular.

People who experience chronic homelessness represent only about 30% of our overall homeless population in King County.

But by definition, and there's actually a federal definition for chronic homelessness, People experiencing chronic homelessness are homeless longer than most people who experience homelessness only temporarily or momentarily.

And again, by federal definition, they suffer from a disabling condition and often multiple conditions that prevent them from working or maintaining housing.

And examples of those disabilities can be chronic health problems, substance use disorders, severe untreated mental illness, severe physical disabilities, and it's often a co-occurrence of all of those sort of circumstances together.

And it's the presence of those disabling conditions that helps to explain the persistence of their homelessness.

But it also helps to explain why the solution that we advance, which is supportive housing, works.

And so Colleen did a wonderful job explaining what supportive housing is.

It's non-time limited housing that has wraparound services available.

But I also want to explain what it's not.

It is not a handout.

And I hear this a lot from people.

It is not a handout.

Residents of supportive housing, generally will contribute up to 30 percent of their income, which for this population is primarily disability benefits that many people didn't even know they were eligible for until they went into supportive housing and had the support that they needed in order to file for and receive those benefits.

They also sign a lease that has many typical renter provisions that you would expect to see in any lease.

So it's important to understand what it is.

It's important to understand what it's not.

And then the last thing I'll say before I stop is I really want to hit home on the cost-effectiveness of supportive housing for chronic homelessness.

Council Member Lewis mentioned that a lot of people experiencing chronic homelessness are high-frequency users of emergency room services, first responder time.

They're also, dragged through the criminal justice system at pretty unprecedented rates, which is the most expensive and least effective way to respond to the problem.

On the flip side of that, supportive housing has been shown consistently, and you can go to the Third Door website and look at decades of studies from all different sorts of entities that have studied this issue and have determined that providing people with supportive housing is the most humane and cost-effective way to address chronic homelessness.

And all of us have a shared interest in solving our unsheltered chronic homelessness crisis.

So hopefully that's a bit of an overview of why the third door is focused on this area.

And I would, as I mentioned before, I'd invite people to visit our website for more information.

I wanna ask a couple of really quick questions then pivot to our audience questions.

But Professor Rankin, can you talk a little bit about the capital and operating costs that you've identified for like the goal number of what Third Door has outlined and how, you know, like 37 to 40 million, which is sort of what the ballpark of what we're looking to do with the city in a capital gains tax, why that number kind of fits in well with the metrics that you've identified?

Sure, certainly.

So our proposal and we offered this framework essentially as a public good.

I should stress that we're just a group of volunteers.

It's not, we're not a corporate backed entity or we're just that unlikely group of folks that have come together to really try and push this issue.

So the framework that we offered was based on hundreds and hundreds of conversations that we had with all sorts of unlikely allies.

about how we could bring supportive housing to scale.

The framework that we offered calls for a public-private partnership of 1.6 billion in capital that would allow us to bring supportive housing to scale in the region.

It's important to recognize too, I think that that framework is even more important now.

It was always important, but it's even more important now in the grips of the pandemic when we have A lot of our private businesses, especially our small businesses, are struggling.

And at the same time, our government coffers are being stressed.

And so that sort of partnership is really important because government alone can't end homelessness.

It's our collective responsibility to do it.

So this framework would be a legislatively created public-private partnership, something akin to the Opportunity Scholarship Fund.

There's a bunch of other successful precedent that has been pursued at the state level, and that would be broken down into allocations that would be 10% from the city, 30% from the county, 20% from the state, and 40% from business.

And that would allow us to have the capital build.

And we are having a series of strategy sessions on how we would be, and we've got ideas for this, and we invite people to participate in these strategy sessions.

But the operating costs are a separate piece that we think would need to be funded, obviously, on a continuous basis to make sure that we're sufficiently paying our social workers and other treatment providers housing providers, such as Colleen's group and others who do such important work, really to build the necessary capacity to be able to support these housing projects.

Great.

And thank you so much for the work that you and the rest of your unusual group of allies are doing Professor Rankin, and it's been great to work with you so far during during this term on the council so with that, I mean why don't we, why don't we pivot to the audience.

you know, a half an hour or so of questions and close out the town hall.

So Camila, do we have any questions ready?

Yes, we do.

I want to say thank you to all of the panelists.

This has been very interesting and I've also learned a lot by listening to this presentation.

I'm going to start with the first question that I have here for Senator Nguyen and Councilmember Lewis.

And the question is, if the Internal Revenue Service defines gains from the sale of capital assets as income, And the Washington State Constitution expressively prohibits a tax on income.

Why does the council continue to promote this strategy?

It actually doesn't expressly prohibit it.

It prohibits property.

So the definition was back from 1930. The ruling was done during the last Great Depression.

So the Constitution doesn't actually prohibit income.

It's actually something separate.

So you look at capital gains, look at how it operates.

Um, you only trigger capital gains when you sell something.

So if you sold a car, you bought, uh, you know, uh, something, uh, that's when you trigger a sales tax.

So this is very similar to that type of model.

Um, and semantically too, if that's the argument, then if we think that it is the same, like then what they should, like income gets taxed at a different rate and capital gains.

So if they, if they think that income is the same as capital gains, well, then do you want to charge at the same rate?

And the federal government also has a tax on income.

So it's kind of, you're picking and choosing at that point.

But at the end of the day, look, you're right, it's gonna probably be challenged in the court.

And in fact, I guarantee this can be challenged in the court.

And I think we should have that discussion.

But when we're talking about income inequality, we're talking about investments in our community.

I think that is the focus of what we're trying to achieve and making sure that we do it in an equitable way.

But the constitution doesn't actually prohibit income, it's separate, it's property.

Yeah, and I don't really have much to add to that.

Senator Wynn did an awesome job responding to that question.

It is a good question, and I appreciate the audience member that asked it.

I guess the only thing to put a fine point on it is just to say that the city has the same excise tax authority as the state.

And that's what it is.

Ultimately, an excise tax is a tax for the privilege of engaging in a transaction, basically.

And we've got all sorts of examples of excise taxes, real estate excise tax, that we already are currently using in the state of Washington.

with the first application of an excise tax on an individual rather than a business.

So that would be mostly the basis of the challenge.

But I mean, I think we got a good argument, you know, that just because we haven't done it before doesn't mean that we don't have the power to do it.

We've just opted not to.

But, you know, that is how the state is drafting theirs.

And that is how I intend to draft mine as well.

And like I said earlier, it's the same excise tax authority that the state has that we would be using.

I think we can just leave it at that.

And if you send me an email, I'm happy to talk more about it for sure.

Second question is related to some of the things you just discussed.

Does a capital gains tax stand a better chance of passing than a wealth tax by passing the person means approved by the courts and defeating the inevitable IMAN initiative?

Yeah, that's another good question.

I guess the only thing I would add to my previous response, and Joe could jump in on this too if he wants to, but you could probably do a wealth tax as a tax on intangible property.

Because, well, you know, if you own like a painting by Picasso, or if you own, you know, like, like, kind of a lot of the other stuff that were in Elizabeth Warren's wealth tax, for example, we could probably do that as a tax on intangible property.

It would be subject to the 1% limit that is constitutional and is explicit.

You know, that's not what I'm proposing.

But, you know, I think that would be very hard to administer.

You know, you'd have to have people go out and appraise all their wealth and verify it somehow.

And, you know, not saying that it's not a worthy cause, but that's something I'd rather see probably done by Senator Warren at the federal level than something that we would pursue Here, just given our limitations as a city and how we could institute it and how we could enforce it, but but it is a good question.

This next question is for Colleen.

It says I live in Pioneer Square and I see the homeless population visibly growing in our neighborhood almost daily and our city services garbage, as an example, is not cleaning the streets.

I talk to many people daily and they have no idea where to go for support.

Where would you direct them?

Colleen, you want to jump on that one?

I was like, Council Member Lewis should answer that one.

Yeah, I really have to answer that.

Well, the number one thing I'll say is that in front of the Chief Seattle Club every single day since COVID happened, we've been feeding anyone who comes anywhere who would like to come.

So I feel like we're doing, well not feel like, I know we're doing about 300 meals a day.

for any of our folks out there who are experiencing homelessness.

The other thing I would say that we do have limited resources in Pioneer Square right now.

There's been agencies that have had to shut down because of active COVID in their in their population.

So the Compass Center has just been doing a tremendous job.

They are right there in Pioneer Square.

They're the ones who are open the most right now.

They have the most bathrooms.

We've had to shut our bathrooms down at Chief Seattle Club because they weren't adequate to the COVID response that we needed to do.

So Compass Center has just been amazing.

Food is available from 8 to 10 a.m.

right in front of the Chief Seattle Club.

And then I guess the other thing I would say is that we just need more resources.

There's just not enough in Pioneer Square right now.

There are some bathrooms at City Hall Park.

They're just porta-potties.

There's also some resources over by King Street Station.

But the reality is that we just need more resources.

They're trickling in, but there is a lot of work that needs to be done.

Finally, I'll say that one of the things that is of biggest concern for me is behavioral health resources.

We have folks who are living in Pioneer Square right now who are not like in hotel rooms because a lot of our folks are in hotel rooms, the homeless community right now.

But they didn't make it because they've just been suffering with tremendous mental health situations for a very long time.

And when I think about our homeless population in Pioneer Square at the moment, my heart breaks for them.

We should all be completely outraged that we have gotten to this situation where our beloved homeless communities, our relatives, our brothers, our sisters, that they are suffering tremendously and we are not doing enough to support them.

So I wish I had much better news on that.

And maybe Council Member Lewis has, he probably does.

Well, you know, let me say this.

I am hopeful that in our current budget conversation, you know, we're going to have some more resources to get folks off the street into a place where they can live with dignity and not be, you know, down in Pioneer Square or any other neighborhood for that matter, where they're currently experiencing chronic homelessness.

You know, Council Member Mosqueda, Council Member Morales and I have been really, really avid that the city kind of seize the sort of state of emergency on this and really look at ways to scale up.

temporary transitional placements, like until we get permanent supportive housing online, be it tiny house villages, be it modular housing, one of which, Colleen, Chief Seattle Club recently scaled up a modular transitional shelter in Soto that is great.

Hoteling, there's all sorts of different strategies people are using.

Working with Co-Lead, which has actually been doing a lot of work, a law enforcement assisted diversion program, in Pioneer Square, getting folks out of chronic homeless encampments and into hotels that are supported by King County, I think is supporting that effort in conjunction with us.

So, you know, I'm working on it through the summer budget session.

The hope is that council members Mosqueda, Morales and I are going to get an ad to scale up more of those transitional placements.

And it's a huge priority for me.

I hear I'm from constituents all the time and I see it myself when I go into the office in Pioneer Square, just the urgency that is needed and I share it with you.

Could I just, yeah, I just wanted to sort of add in on that.

I think the question that was asked is such a great question because a lot of folks think that there are just so many services and so many behavioral health options that are available.

or even just shelters, and even folks who do this work day in and day out don't have great places, you know, great options in terms of places to refer people because there's such a shortage.

And so people who experience unsheltered chronic homelessness learn fairly early on that when, even when an offer of service or treatment is extended, that it's not really a meaningful offer because even if they go someplace, they might not be eligible.

They have to find transportation there.

They may have a barrier to treatment.

There's very, very common staggering lists of barriers that prohibit people from being able to access services and treatment that could help lift them out of homelessness.

And the other piece of it too is that as important as services and treatment are, and this goes back to the point about supportive housing, Without the stability of housing, this is what all of those studies show that are on our website, is that people need the platform of stable housing in order to be able to rebuild their lives.

They need that stability in order to be able to benefit from services and treatment at higher levels and in a more robust way.

So in order to have meaningful work, of course we have to do emergency services, we have to have a Band-Aid response, But ultimately what we need is housing and and supportive housing is that housing with services and wraparound wraparound services available that allow people to both live with dignity and really be able to achieve.

you know, higher levels of recovery from the various challenges that they're facing.

I just want to jump in one more time.

Just one quick thing.

It'll be fast.

Is that what's been exciting about hoteling?

So like Chief Seattle Club has like 75 to 100 people right now in hotel rooms.

DESC has hundreds.

Somewhere around like 700 to 800 folks have been in hotels because of COVID.

They are doing so well.

Of course, there's some that are struggling and have, but it's a small, small percentage to Sarah's point, getting them into that stability, getting that place where you can have your own space to lay down, to use the bathroom, to just have human dignity.

That's what we're talking about.

It's just human dignity to give people that place of stability and security is changing people's lives.

I am so excited to see what happens because I'm seeing a lot of really great leadership from the city and from the county to think about how do we keep people in these hotel rooms?

How do we buy hotels?

How do we figure out ways to make this better for this community?

And I also wanted to add to the Pioneer Square question specifically that on Tuesdays and Thursdays in front of the Chief Seattle Club, we're also offering COVID-19 testing for any of our homeless community that is in that area, which is really, really important so that they have access to testing and services.

And that is in partnership with the amazing, amazing organization, Seattle Indian Health Board, who is offering those services to anyone who needs COVID-19 testing.

Thank you so much for flagging that service, Colleen.

More prescient than ever, unfortunately.

And, you know, just to put a pin, too, on the hoteling a little bit.

You know, it's been amazing because CoLEADS started as, you know, taking folks experiencing homelessness who were let out of King County Jail to de-intensify the jail at the beginning of COVID.

King County Jail costs us about $200 a night to keep someone there.

Co-lead is hoteling people at a cost of $69 a night.

I'm making that point last, because I think all the points about it just being good policy have already been made, but to put a pin on it for the taxpayer, it's a good decision as well.

It gets better results and costs a lot less.

So Camila, do we have another question?

Yes, we do.

This question is a two-part.

Can the city council enact a local capital gains tax absent of specific authorization from the state legislature?

And then the second part is, Council Member Lewis, does your proposal come with a complimentary cut in the city's sales tax?

Yeah, good question.

So first off, I actually did look into making, doing some potential reforms on our sales tax.

Like we have the highest sales tax in a state that already has a high sales tax in the city of Seattle.

The way that the sales tax is administered and collected, we actually don't have the ability, unfortunately, as a city to go in and mess too much with the sales tax, that's something that Olympia would have to do.

So, you know, when I answer the rest of the question, I'll turn it over to Senator Nguyen, and maybe we could talk a little bit, too, about what I think is a worthy cause, which is really having a serious discussion about how we lower regressive taxes as well, in addition to instituting progressive ones.

On the authority from Olympia, we do have authority as a charter city, as I kind of discussed earlier around being able to impose excise taxes, so it's not explicitly.

It's not explicitly a tax on capital gains as such.

And in fairness, you know, Senator Nguyen and I, both of our proposals, they're not strict taxes on capital gains.

They're taxes on certain capital gains with others exempted.

And we can do that under an excise tax where we have a lot of authority to sort of plug and play with it.

But that is the source of authority for both the state and the city is under our excise taxing authority.

You know, of course, as we discussed earlier, you know, some folks will argue that that is outside the scope of the authority.

And, you know, I mean, I welcome that discussion because I think it's squarely within it.

And I'm sure Senator Wynne agrees, but I'll turn it over to you.

Yeah, no, I agree.

I mean, like, obviously, we have a judicial system and we have a democracy with checks and balances.

And I think these are tough conversations that we need to have in terms of how we should invest in our economy and invest in our people.

But I do agree in that we and every opportunity to try to lower taxes for middle and working class families, because they've been taking the brunt of the regressive policies that we have.

in place right now, especially when it looks even like small businesses, right?

Like the vast majority of small businesses, you can actually exempt them from B&O by raising rates for larger corporations at a very nominal rate who pay overall a little bit less, a lot less than most people as well.

So I think in these conversations, that is the ultimate goal is to not just raise revenue for the investments in our community, but how do we then try to balance it out and then lower the burden for working middle class families in other ways possible as well.

Yeah.

So Camille, why don't we do, because I know we're going to lose Professor Rankin soon as well.

Why don't we do one more question and then we can kind of close out the town hall with some closing remarks from folks.

So who's up next or what questions up next?

Actually, can I ask two questions?

I think this will be pretty quick.

The question is, I assume the exemption on homes is for a primary residence and not a second home or an income property?

Yeah.

I haven't actually finished drafting my ordinance yet.

That would be my intention is to craft an ordinance that is as close to the parameters of the state one as possible.

Because like I said before, Right.

And so, yeah, so so since since in the state one that is the nature of that exemption, I would want to try to model that in my ordinance as well, because I don't want to have a situation where we have a a broader city, broader city liability or narrower city liability in the state one just for in terms of administrability and confusing people.

So.

That yes, that'll probably be what is reflected when we do finally put our ordinance together.

Okay, and this can be our final question.

It's a question for Senator Nguyen.

It says, why doesn't the state of Washington pay for these social services and homelessness, et cetera?

Why put the onus on the city of Seattle?

And it draws attention to our property revenue that is raised here in the city of Seattle.

As floating like kind of the rest of the state's public services.

And so the concern and I think the question reads to if Seattle adds a capital gains tax, and it's not done in lockstep with like other jurisdictions will will people start to like move to other areas.

Um, and this will be kind of an already, uh, you know, you're using, you're living in one city, but using another city as, as your primary residence and getting out of it.

And this person is really concerned about that.

So.

That's a very real possibility.

And can only see a little bit right now, bleed across to the East side of the mountain or East side of, uh, even just I-90 and the state absolutely should be paying more.

Uh, obviously there's a lot more need.

Maybe you hear my son yelling me right now on the side.

Uh, The state certainly needs to invest more in our infrastructure.

So what's interesting is that our budget is fairly constrained in terms of what we can spend our money on or what we should be spending our money on.

And from a constitutional perspective, it's largely on K-12 education.

And because of some recent lawsuits with McCleary and others, a lot of the resources were sucked to those specific efforts, which are important.

However, it's still finite.

We don't have income tax.

We don't have capital gains.

We know that we have mental health issues.

We know that we have homelessness issues.

We know that we have a lot of issues.

We definitely have a transportation issue.

So if the state could pay for more, I absolutely think that we should.

That's just not the realistic proposal that we have at this moment.

And that's why I think Andrew's pushing for this legislation.

That's why we're doing it at the state level as well, is to get new revenue to actually fund these things because we haven't in the past.

Yeah, so I applaud whoever asked that question.

I probably could have asked that question myself.

Why aren't we getting more money, Joe?

But I appreciate it.

And I do think that that is why syncing up this conversation of having a state and a local capital gains tax at the same time is better, obviously, than having just the city, Seattle, have one and nowhere else in the state have one.

You know, I think we got a lot of really good examples of taxes where there is like local share or like a local edition.

I mean, like I said earlier, you know, people in Seattle pay more on property, sales tax, real estate excise tax, B&O tax.

I mean, you go down the list.

All of our taxes in Seattle are slightly higher than the rest of the region because we have elected to raise them higher to pay for, actually, among other things, pretty much all the social services for the entire region, for the most part, in our budget.

I think that capital gains should follow in that same trajectory.

Like, I think we should have a bigger state one.

And just for the record, I think the state one, you know, comes in at, like, what is it, Joe?

Is it like 5%, 7% of the highest bracket?

Do you remember?

Nine.

Sorry?

Nine.

Nine percent.

Nine.

Nine percent.

So, you know, it depends.

It depends which version you look at.

But the governor's version was 9%.

Right, right.

Unlike that highest bracket.

So, you know, for the city one, um, you know, I, I am thinking more in like the, you know, the half a percent to 2% range for different brackets laid out as an excise tax.

Um, so, I mean, it would be, it would be a smaller additive one that would go on top of it, probably not enough to incentivize moving and leaving if there was already a state one that you're paying anyway.

And, and there's all sorts of reasons why people want to live in the city of Seattle.

besides just shopping for how much you pay in tax.

And that's been the case with a lot of our other taxes in our current system.

And I would hope that it continues to be the case with capital gains as well.

But anyway, I think that's a good question to end on.

I do wanna give our guests an opportunity maybe to say just a couple closing words.

Professor Rankin, I know you need to leave soon, so maybe starting with you and then sign off.

Thanks.

I have been learning a lot in this conversation.

I love the questions.

They're extremely interesting to me.

I think, obviously, I want to thank you, Council Member Lewis, and you, Senator Nguyen, and you, Colleen, for investing so much time and passion in this important project.

And I think if this pandemic has taught us anything, it's that housing is health care.

And that's not just healthcare for people experiencing chronic homelessness.

It's really essential to our collective public health.

And we're in the middle of a crisis.

We have to triage housing and health are essential to our entire regional recovery.

And so I really thank you for taking bold and urgent steps to address a long overdue issue.

Thank you.

Thank you, thank you so much.

Colleen, any closing remarks?

Yeah, well, thanks to everyone on the call.

It's been really, really interesting.

You know, I just have to think about where I'm sitting right now.

You know, I'm sitting in North Seattle in a, you know, middle income home that I own.

And I'm thinking about all of us who live in this region.

We greatly benefit from the land and water of the Coast Salish communities.

the many very wealthy people who live in this region benefit greatly from our native people in this area.

Some of the nicest Indians in the whole world live in this region.

And I think about that a lot because I know that I have to think about my benefit.

When I think about the folks at the Chief Seattle Club who we serve, you know, we have a program called Native Works that gets people back, people have been experiencing chronic homelessness get them back to work.

I'm remembering my, the program manager called me one day and said, you know, we've had this guy who's been in here for nine months, we got, we had him do his taxes.

He owes taxes.

This is someone who is currently homeless, who's trying to get their life back together, and they're asked to pay a tax.

And it just, it blew my, it blows my mind even to this day.

And we've had to figure out how to make sure that we can pay them as part of our, pay their taxes as part of the apprenticeship program.

We have, we have good people in this region.

We talked about Jeff Bezos quite a bit.

I follow him on Instagram.

He was awesome about Black Lives Matter.

I don't know him personally, but I want to believe something good about every, every person in this region.

And I'm asking everyone on this call to think about what our responsibility is to our folks who are experiencing poverty at such high rates, including Native people who have the highest rates of poverty in this region, highest rates of infant mortality.

11% of Native babies will die in this region.

That's because of poverty.

That's because of lack of housing.

That's because of the generational historical trauma.

And we can do better in this region.

This is, to me, a no-brainer.

way that we can encourage and lift up our communities who've been experiencing such disparity.

So thank you all for the time.

Maybe Jeff Bezos heard that.

Who knows?

It was complimentary.

I was.

I was like, come on, Jeff.

You can do it.

All right, Senator Nguyen, close us out.

Yeah, no, thank you so much for the opportunity to speak.

I think at the end of the day, this isn't about taxes.

This isn't about, you know, it's about people, right?

We're investing in people.

We're trying to make sure that we have a society that serves all of us in a way that is fair and just.

And being able to do that is this proposal that Andrew has, and I think it's a good start to a conversation that we desperately need in Washington State because we're very regressive, right?

Like we have models of our tax structure on top of Idaho's and how much more that would bring in just because of how much more fair Idaho's is compared to this.

So the biggest thing for me is the takeaway is that we as a society, like Colleen said, we should prioritize people over profits.

And you're right, I think, I don't know him personally as well, but I do know that there are very forward thinking people who care about the environment and who care about our communities who wanna alleviate homelessness.

And that's why we have a third door coalition with Sarah with some unlikely allies, because we all understand that we're in this together.

And this is just one of those mechanisms to solve big problems here in Seattle and Washington State.

And it's just an honor to be a part of a larger group having this conversation.

I don't feel like we've had this before in the past.

And the fact that we have this type of engagement across the spectrum has been very uplifting.

So I'm hopeful for this proposal, but other ones as well.

Thank you so much, Senator Nguyen.

And just to make a couple of closing remarks myself on that theme.

I definitely wanna echo the points that you just made around the fact that it is about people.

And that's why, honestly, that's why I wanted to meld this town hall and this conversation between equitable taxes and permanent supportive housing.

Because I do think they're inextricably linked I've always held that we should have plans first, taxes second.

And once I saw that with the third door's regional plan of 6,500 new units of permanent supportive housing, penciling the city in for 10% and that 10% over five years was going to be $32.5 million a year, and that a capital gains tax along these lines could bring in about $37 million and that that fit pretty neatly.

These are the kinds of conversations we need to be having where we can advance equitable policies through equitable taxes instead of constantly resorting to The choice that we've always been given in the past as Washingtonians, which is to, you know, to raise property taxes to raise sales tax, you know, to raise, you know, taxes that fall very heavily on small businesses.

What because of the way that they're structured so.

I really appreciate, you know, Joe, Colleen, Sarah, and obviously earlier, Secretary Reich for joining us to have this conversation today.

To members of the public, too, I would say, as I've mentioned multiple times, you know, I haven't actually formally introduced an ordinance yet, so I am still I'm in a position where feedback is very, very much welcome and appreciated.

Obviously, some stuff came out from the questions and from the panel today that are going to inform that process.

And I really do encourage folks, you know, to continue to email my office at andrew.lewis at seattle.gov.

Continue to follow the activities of the council, sign up for my newsletter on my website, seattle.gov Lewis, and where you can also sign up for office hour appointments every week.

Try to keep a good number of slots open and always accessible to talk in person about this or other topics in the district.

So do not hesitate to reach out.

We're one minute over time.

So good job, everybody.

We kept it pretty tight.

And with that, I think we'll sign off.

Thank you so much.

Really appreciate everybody coming in here and thank you for all the service you do in the community in District 7 and beyond.

So thank you.