The election is less than six weeks away and Washingtonians will be deciding on a slate of initiatives, including one measure affecting funding in support of children.

If passed, Initiative 2109 would repeal a 7% tax on capital gains for assets worth more than $262,000. The repeal has support from hedge fund manager Brian Heywood, who said it is a slippery slope toward a state income tax, which the state does not have.

Gabriela Quintana, senior policy associate for the Economic Opportunity Institute, said fewer than 4,000 people in the state pay the tax.

"It's a very privileged move to be able to fund these initiatives for your own needs and to not think about the impact this will have on a huge majority in Washington state," Quintana contended.

Last year, the tax pulled in about $786 million. The first $500 million collected from it goes toward schools, early learning and child care. Any additional money collected goes toward school construction.

Justin Fox-Bailey, president of the Snohomish Education Association, said the vast majority of Washingtonians who do not pay the capital gains tax will be affected if Initiative 2109 passes, especially kids.

"They're going to feel it in their communities when we give a tax cut to these millionaires and billionaires and you don't have the same access to child care, your kid's school isn't getting updated, public services are being cut or reduced," Fox-Bailey pointed out.

Washington has historically had one of the most regressive tax systems in the country and a recent report found the lowest-income 20% pay more than three times as much of their income as the top 1%.

Quintana argued the capital gains tax is vital for the state.

"We all need to play a role, including the wealthy individuals," Quintana asserted. "Repealing it will only really hurt families and children."

Ballots start going out on Oct. 18.

A new report found Connecticut's fiscal controls on the state budget restrict long-term growth.

The controls were introduced during the 2018 budget year to stabilize the budget and long-term controls but since their implementation, the budget surplus total grew to more than $12 billion, which observers said means they are twice as restrictive as they are supposed to be.

Patrick O'Brien, research and policy director at Connecticut Voices for Children, said there is a better way for the budget controls to work.

"We make the case for a more balanced approach," O'Brien explained. "One that maintains fiscal discipline while introducing the flexibility necessary to fund current needs and make public investments essential to supporting families and children, and growing the state's economy."

Reforming the fiscal controls involves changing the state's revenue and spending caps. In practice, the state needs a well-designed volatility cap since personal income and entity taxes are highly volatile. But the current cap's threshold was set too low and is indexed to a variable with no meaningful connection to the taxes, which created up to $755 million per year in restricted revenue, or more than $5 billion between 2018 and 2024.

Making changes to the caps would result in more reasonable restrictions on the collected funds. The report noted Connecticut's spending controls are beneficial. But because personal income growth is slower than the nation, it is limited economic growth.

O'Brien argued the spending cap could have created more revenue.

"If the state's spending cap had continued adjusting since fiscal year 2018 based on the original inflation index rather than a narrower index but excludes food and energy," O'Brien emphasized. "Which has made the spending cap excessively restrictive."

The report also found adjusting the budget reserve fund allows the funds to be used for services beyond debt reduction, like programs to help the state's children and families.

The Internal Revenue Service will be in the crosshairs in the second Trump administration, as the president-elect's recently announced choice to run the agency has called for it to be abolished.

Former Missouri Congressman Billy Long, Trump's choice for IRS Commissioner, cosponsored a bill to get rid of the IRS and implement a national sales tax in its place.

Ryan Polk, assistant professor of accountancy at Clemson University, said if the new administration starts laying off IRS workers, taxpayers and businesses in California and across the U.S. would see big delays.

"When you defund or reduce the funding at the IRS, you run the risk of a less helpful IRS," Polk contended. "The average, everyday taxpayer might be worse off when they have a question."

During the Biden administration, the IRS got an $80 billion boost in funding from the Inflation Reduction Act and used it to overhaul old computer systems and add agents, raising its phone call response rate from an abysmal 15% to over 80%. And the agency added a portal allowing people to upload documents instead of mailing them.

The IRS also debuted Direct File, a system allowing people to file their federal income taxes without paying a tax preparer, available in California and 22 other states. Polk argued the new Congress should understand cutting the IRS budget will limit its ability to pay for the administration's priorities.

"Just last year, they audited taxpayers and collected 100 additional billion dollars that wouldn't otherwise have been collected," Polk pointed out. "That's a pretty significant amount of money. It can go a long way, depending on regardless of the government program or tax cut you're trying to get through."

The IRS said it collects $100 in revenue for every 34 cents it spends on enforcement. Conservative critics of the agency alleged it has been weaponized, with some audits being targeted for political reasons.


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The word "fraud" is likely to circulate in the upcoming Minnesota legislative session. One political expert said state agencies are being targeted but the response requires careful thought.

The recent Feeding our Future scandal has spurred demand for more oversight of government spending in Minnesota. There are renewed concerns about organizations claiming to provide various medical services but engage in phony Medicaid billing.

Tim Lindberg, associate professor of political science at the University of Minnesota-Morris, said larger entities are making a more coordinated effort to defraud key agencies. He pointed out it mirrors global crime rings preying on consumers.

"There is some legitimate concern out there but it is also a global phenomenon that is increasing in size and importance," Lindberg observed. "I think government from the top down needs to sort of figure out a new way to deal with this."

Lindberg pointed out the state has investigative resources and internal controls but he thinks the public sector at large likely has some outdated monitoring approaches, especially as technology evolves. He argued it is important to remember agencies in the spotlight are helping people in need who are not part of these scams, and even with the best controls, completely eliminating fraud is impossible.

The cases have garnered headlines and since Democrats have the upper hand in controlling Minnesota government, Lindberg predicted Republicans will use the trend as part of their push for restrictions or cutbacks. He believes Democrats might agree to certain moves to win back public trust but stressed fraud against government is not a partisan issue.

"People doing these frauds, they don't care who's in office," Lindberg asserted. "They don't care who's in power. And Republicans and Democrats themselves have been in various levels, in various states, overseeing governments where this happens."

Taxpayer dollars are at the center of what's happening. Lindberg added the private sector must also mitigate fraud with steps like major retailers locking up essential items in cases. He suggested lawmakers have to avoid veering off-path.

"What are these ways in which government can work better, more efficiently, but also not eliminate the benefits that these programs are designed to do?" Lindberg asked.


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