Washington State taxpayers have rejected income taxes whenever given the opportunity, yet the free-spending liberals at the State House keep trying. The state’s new capital gains income tax has come under new scrutiny for violating the Washington State Constitution.
The most recent push for an income tax began 2019, when the Court of Appeals struck down the law forbidding local income taxes. This year the state legislature passed a 7% tax on capital gains income greater than $250,000. Two lawsuits have been filed, one by the Freedom Foundation and the other by former state Attorney General Rob McKenna on behalf of the Washington Farm Bureau, demanding that the courts strike down this unconstitutional income tax . Douglas County Judge Brian Huber combined the two suits and heard preliminary arguments on them yesterday.
Professor Scott Schumacher, a professor of Tax Law at UW, agrees with the assessment on the capital gains income tax, saying, “A capital gains tax is just a tax on certain type of income . . . To the extent this is an income tax, and I think it is, it’s going to be found unconstitutional.”
The state Constitution bans graduated income taxes. This means that if the state were to pass an income tax, it would need to be leveled equally to all people, regardless of income. This is because “Washington’s state Supreme Court has consistently ruled that income is property (meaning you own it). This is why a graduated income tax has been prohibited without a constitutional amendment and a tax on income must conform with the constitutional restrictions on property taxes.”
Regardless of the outcome of this lawsuit. Municipalities have already started to fight back. Last week, Union Gap joined the cities of Battle Ground, Granger, Spokane, and Spokane Valley in voting to ban a local income tax. Both Union Gap and Battle Ground’s city councils were unanimous in their decision. In addition, Yakima City approved sending its voters a charter amendment to ban an income tax. “Both Yakima’s and Spokane’s City Charters also already include a supermajority requirement for the councils to impose or increase any taxes.”
One of Washington State’s most competitive traits is that it has no income tax. This “has long been advertised by the State Department of Commerce as being a “competitive advantage” for Washington. State voters have also made it consistently clear they don’t want an income tax.”
Six different ballot measures to change this by amending the state constitution have failed, in 1934, 1936, 1938, 1942, 1970 and 1973. Four ballot measures to introduce a state income tax also failed, in 1944, 1975, 1982 and 2010. Additionally, in 1984 Washington passed a law forbidding local income taxes.
The Olympia establishment has made their intentions clear. They want an income tax in Washington. Voters and municipalities have repeatedly sent their reply: No.
Washingtonians hate the income tax. Olympia would do well to listen to their people and end this pointless quest for higher taxes. If they don’t, they may find their own constituents turning against them.