OLYMPIA — An initiative to repeal the state’s new capital gains tax is dead for this year.

Sponsors of Initiative 1929 said June 10 they won’t proceed and will instead await the outcome of a lawsuit challenging the legality of the tax.

“While our polling shows that voters overwhelmingly support repealing the capital gains income tax, our coalition has confidence in the strength of the court case and we believe that the lower court decision will be upheld on appeal,” said Mark Funk, a spokesman for the political committee behind the measure. “Therefore we believe the best coalition strategy in 2022 is to place our confidence in the courts to overturn this illegal tax.”

The law at issue was passed in 2021 and took effect Jan. 1. It levies a capital gains tax on annual profits reaped from the sale of long-term assets, such as stocks and bonds, for some individuals and married couples. Under the law, the state will collect 7% of profits above $250,000. The law contains exemptions for retirement accounts, real estate and some agricultural and small businesses.

If the law is upheld, it will generate an estimated $415 million for early learning and child care programs in 2023, the first year of collection.

“Poll after poll shows Washington voters increasingly oppose tax cuts for the super rich, especially when it means cutting hundreds of millions from our schools and childcare” says Treasure Mackley, executive director of Invest in WA Now, which helped pass the capital gains tax.

In March, Douglas County Superior Court Judge Brian Huber ruled that it is an unconstitutional tax on income. The case is on appeal to the state Supreme Court, Funk said.

“In the event that the state Supreme Court decision allows this tax to go forward, we believe that the voters are prepared to make their voices heard by overturning this tax at a future ballot if necessary,” Funk said.

The initiative’s fate seemed sealed even before the June 10 announcement as sponsors never began gathering signatures. Sponsors faced a July 8 deadline to collect and turn in roughly 325,000 signatures to qualify.

“It was clear that this initiative did not have public support from the start,” said Tara Lee, spokesperson for the No on 1929 campaign. “The initiative proponents struggled to raise the kind of money that is necessary to gather signatures and run a successful statewide campaign. To fight this initiative, a broad coalition of workers, educators and families came together and are ready for whatever comes next.”