Get Announcement 98-57 - Changes To Excise Taxes. Changes To Excise Taxes

Passed by the 2021 Washington State Legislature, ESSB 5096 (RCW 82.87) created a 7% tax on any gain in excess of $250,000 in a calendar year from the sale or exchange of certain long-term capital assets such as stocks, bonds, business interests, or other investments and tangible assets.

The tax makes it more expensive to produce each unit, which raises the marginal cost of production and, thus, causes the supply to decline. The decline in supply is exhibited by the leftward (upward) shift in the supply curve.

They are typically used to accomplish two goals: to raise money for various public efforts and to discourage certain public behaviors. This is apparent in many of the goods that are subject to excise taxes.

In the short run, an excise tax increases the price of the product, albeit by less than the full amount of the tax, and the price burden is shared by both the producers and the consumers. The exact effect depends on the elas- ticities of demand and supply for the product.

- When an excise tax is imposed it produces a wedge between the price paid by consumers and the price received by producers. - Consumers pay more for a good or service than the amount received by producers.

Excise taxes may be imposed as social measures, such as a tax on packs of cigarettes, or may tie the consumption of certain goods to certain public efforts, such as a tax on gasoline to pay for improvement of roads.

The special September rule accelerates a portion of the deposit normally due in October to September. The due date of the special deposit and the amount to deposit is dependent on whether the taxpayer uses electronic funds transfer (EFT) to deposit its Federal excise taxes.

If excise tax is imposed on consumers, the consumer's demand for Good A will decrease. It is illustrated as the demand curve shifts from position D0 to D1. Quantity shifts from Q0 to Q1 after the excise tax has been imposed on consumers of each unit of Good A.