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 The proposal, which Inslee said would provide much-needed funds
for schools and other programs, is included in a $39 billion
2015-2017 budget he unveiled in Olympia, where he told reporters the
tax would raise nearly $800 million.
"We simply have not been able to generate the revenue necessary,"
Inslee said, citing slower-than-desired economic growth and a
failure by lawmakers to close tax loopholes. "This is a fair way to
raise needed revenue."
The levy appears to go against Inslee's 2012 campaign pledge to veto
new tax proposals.
Inslee's budget is likely to usher in a protracted fight when the
state legislature reconvenes in January, with competing proposals
expected out of the Republican-controlled Senate and from Democrats
who have a majority in the House.
 "Investing in student achievement and providing essential services
should not depend on risky tax schemes that threaten our economy,"
said Republican state Senator Andy Hill.
Washington has been one of nine U.S. states that do not tax capital
gains from the sale of stocks, bonds, and other assets, Inslee said,
and the proposed levies are lower than those in Idaho, Oregon and
California.
Washington state in 2016 would apply a 7 percent tax to capital
gains above $25,000 for individuals and $50,000 for couples, which
would affect less than 1 percent of the state's taxpayers, with
exemptions for retirement accounts, homes, farms and forestry, he
said.
Inslee's budget calls for a $5 billion spending increase over the
2013-2015 period, largely going to his $2.3 billion education plan
aimed at bringing the state in line with court-ordered increases in
K-12 schools funding.
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The state Supreme Court in September found the legislature in
contempt for failing to uphold a court order to come up with a plan
to infuse billions of dollars into public education.
Overall, Inslee's budget would raise about $1.4 billion in new
revenues through taxes, including raising the cigarette tax by 50
cents per pack, closing loopholes, and other sources. It still
leaves the state roughly $2.4 billion short.
On Wednesday, Inslee laid out a carbon cap-and-trade program in 2016
aimed at raising $1 billion per year, with some $380 million
earmarked for education.
(Reporting by Eric M. Johnson; Additional reporting by Rory Carroll
in San Francisco; Editing by Dan Whitcomb and Mohammad Zargham)
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