WA Supreme Court Upholds 7% Capital Gains Tax on >$250K (Shelton: rental, home)

[kavm]

This math is not completely valid. We have had capital gains well exceeding the $250K threshold and with a portfolio size somewhere between $2.5 to $3M. And no - we weren't in some type of exotic instruments - standard Vanguard, Fidelity type funds. So, no - you don't need $54.4M portfolio to generate $250K capital gains in a year.

Just stating the facts. A lot of people ordinary people invest in actively managed funds. There is no need to insult them. Law is the law and nobody is disputing that. You have made good arguments about it but it is ludicrous to suggest that one needs $52.4M to exceed $250K capital gains in a year.

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To clarify history - State Street S&P 500 index fund (SVSPX) -

Date Capital Gains / Share Share Price
12/21/20 $33.8856 $233.65

An investment of $1,723,814.84 produced a capital gain of $250,000. A lot of people nearing retirement do save those sorts of numbers, which was the case with us. And, $1.7M is a little below $52.4M suggested earlier.

[jabogitlu]

If you're making in excess of $250k in capital gains and have a savings account with $2.5 to $3 million in it, then yes, I believe you should be redistributing some of that gain back to the society that enables it.

[kavm]

Originally Posted by jabogitlu

If you're making in excess of $250k in capital gains and have a savings account with $2.5 to $3 million in it, then yes, I believe you should be redistributing some of that gain back to the society that enables it.

That is not the point of discussion / clarification.

[texasdiver]

Originally Posted by kavm

This math is not completely valid. We have had capital gains well exceeding the $250K threshold and with a portfolio size somewhere between $2.5 to $3M. And no - we weren't in some type of exotic instruments - standard Vanguard, Fidelity type funds. So, no - you don't need $54.4M portfolio to generate $250K capital gains in a year.

Just stating the facts. A lot of people ordinary people invest in actively managed funds. There is no need to insult them. Law is the law and nobody is disputing that. You have made good arguments about it but it is ludicrous to suggest that one needs $52.4M to exceed $250K capital gains in a year.

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To clarify history - State Street S&P 500 index fund (SVSPX) -

Date Capital Gains / Share Share Price
12/21/20 $33.8856 $233.65

An investment of $1,723,814.84 produced a capital gain of $250,000. A lot of people nearing retirement do save those sorts of numbers, which was the case with us. And, $1.7M is a little below $52.4M suggested earlier.

Point taken. But I think 2020 was a very unusual year with the pandemic whipsaw of the markets early in the year that caused fund managers to do a lot more buying and selling than was normal. So 2020 was very much a black swan anomaly year. In any normal year like 2022, the numbers are closer to what I posted. Even for actively managed funds.

For example, I think the largest actively managed Vanguard fund is Wellington which spun off a capital gains rate of 0.007 in 2022 or .7% so only slightly more than the S&P500. If you were in Vanguard Wellington in 2022 you would have needed a portfolio of $35.7 million to generate $250,000 of capital gains.

In any event, most middle class folks approaching retirement with sizeable portfolios have most of it in tax-advantaged IRAs, Roths, 401(k) or 403(b) accounts anyway and this tax doesn't apply to any of them, only taxable investment accounts.

[kavm]

Thank you! That's all I was trying to communicate. SP&500 index fund should normally not have a lot of buying and selling. Wouldn't mind repeat of 2020 returns though

[texasdiver]

Originally Posted by kavm

Thank you! That's all I was trying to communicate. SP&500 index fund should normally not have a lot of buying and selling. Wouldn't mind repeat of 2020 returns though

Oh, for sure. But annual market gains shouldn't necessarily generate any capital gains.

What generated all the unusual capital gains in 2020 was when the market completely crashed in March and a bazillion people panic-sold their mutual fund holdings, forcing mutual fund companies to sell lots of stock. It was all those unexpected stock sales that were the result of all the pandemic panic selling that generated all the capital gains. Because even though the market was dropping, most of those stocks were purchased by the fund years earlier when the market was a lot lower. So all those sales generated capital gains.

That big pandemic-panic crash there in March 2020 is what generated all the unusual capital gains, not the fact that the market ended 2020 higher than it started.

[xPlorer48]

Originally Posted by sithlord72

The problem is these leftist thugs on the WA Supreme Court are never challenged. They almost always run unopposed. Stop voting for these buffoons . Like Inslee. Why would anyone vote for him again ?

That is the problem. If I can vote for someone who will look out for us middle class (although in Whatcom County, we are now below the median income by $20,000), and who doesn’t subscribe to progressive politics, I will. But, too often there are people like Alex Ramel who say, “no sweeps”. If not, I don’t vote. Too woke, don’t vote.

[kavm]

@texasdiver - Thank you for the explanation. That makes sense.

[jabogitlu]

Originally Posted by xPlorer48

Too woke, don’t vote.

I fully support this.

[kavm]

This decision was appealed to the US Supreme Court. It remains to be seen if the Supreme Court decides to take the case… There are new articles but the filing is referenced below:

https://www.washingtonpolicy.org/lib...tition-40-.pdf