Sporting the most regressive tax structure in the nation by far, and facing relentlessly negative revenue forecasts at a time when the budgets of less sales-tax-dependent states are beginning to recover, you'd think a capital gains tax would be a no-brainer for Washington state. A five percent excise tax on capital gains (profits from the sale of stocks, bonds, and real estate), with a $10,000 exemption, would raise over $500 million a year, while impacting only the wealthiest three percent of households.

That's money we desperately need to pay for K-12 schools, public universities, prisons, parks, and everything else state government does. And with capital gains highly concentrated in the hands of the rich—96 percent goes to households with incomes over a million dollars a year—such a tax would constitute a small but welcome step toward tax fairness.

You may notice something a bit confusing about this chart. Yes, 96 percent of capital gains income goes to households earning over $1 million a year, but an additional 16.3 percent goes to households earning between $500,000 and $1 million, and another 13.4 percent goes to households earning between $200,000 and $500,000.

Wait... that's 125.7 percent! How's that possible?

Because, on average, households earning less than $200,000 a year (i.e., most of us) experienced net capital losses in 2010. Think of all those upside-down mortgages out there, and what happens when you're forced to short-sell.

So there you have it. A state capital gains tax would be a tax that could only impact the very wealthy, because most of the rest of us don't have any capital gains to tax. So there's no slippery slope argument to make here, like that disingenuously spewed by opponents of the high-earners income tax. And no, HB 2563 would not tax capital gains from the sale of your primary residence, or on inheritances or retirement funds. This is a tax on the top three-percenters.

As for its chances of passing, if lawmakers insist on slavishly obeying I-1053's clearly unconstitutional two-thirds supermajority requirement (and if they have the balls, they needn't), then it obviously can't be passed legislatively. But there appears to be enough support in the House to refer it to the November ballot.

So, as usual on revenue issues, it's the roadkill Dems in the Senate who get to make the final decision. And if past performance is any predictor, they'll side with the millionaires.