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Bill

SB 5797

Enacting a tax on stocks, bonds, and other financial intangible assets for the benefit of public schools.

2025-2026 Regular Session Introduced by Emily Alvarado and 14 co-sponsors

Washington Senate passes narrow 26-21 vote on financial asset tax to fund public schools, moving proposal to Finance Committee for further review.

Rules Committee relieved of further consideration. On motion, referred to Ways & Means.
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Bill Summary · SB 5797

Legislative bill overview

SB 5797 proposes a tax on stocks, bonds, and other financial intangible assets in Washington state, with revenue dedicated to public school funding. The bill passed its third reading in the Senate with a narrow 26-21 vote and now moves to the Finance Committee for further consideration.

Why is this important

Washington currently has no state income tax and relies heavily on sales taxes, which disproportionately affect lower-income residents. A financial asset tax could generate substantial revenue for education—a persistent funding challenge—but would represent a significant shift in the state's tax structure and affect both individual investors and institutional portfolios.

Potential points of contention

  • Constitutional concerns: Washington's Constitution prohibits income taxes without voter approval; opponents argue a financial asset tax functions as an income tax and may face legal challenges
  • Economic impact: Critics contend the tax could drive investment and wealth out of state, reduce investment in Washington businesses, and increase costs for retirement accounts and mutual funds held by average Washingtonians
  • Implementation complexity: Defining and valuing "financial intangible assets," tracking transactions, and preventing tax avoidance require substantial administrative infrastructure and enforcement mechanisms
  • Equity questions: While framed as funding schools, debate exists over whether taxing investment assets—often held by wealthier individuals—truly creates a progressive tax system or burdens middle-class retirement savings

Compiled from official sources — confirm details with the bill’s official record.

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