Stop the Income Tax!

Income tax on the table for 2021

Inslee proposal for ‘starter income tax,’ public exclusion from Olympia, bring state close to brink

Washington voters say no 10 straight times

Updated Jan. 10, 2021

In a year when the public will be kept at a distance, Gov. Jay Inslee and Democratic members of the Washington Legislature are preparing to push the most controversial bill in the history of the state – a proposal for a new Washington-state income tax.

Washington voters have said no ten straight times over the last 86 years. Advocates of higher taxes and spending won’t take no for an answer. They have adopted a convoluted strategy. They don’t call it an income tax. They insist their new tax on capital gains income will bail the state out of its current financial problems, even though court challenges would drag on for years. They have embraced a mythology that just doesn’t stand up to scrutiny.

As COVID restrictions block public access to the Capitol this year, tax advocates see 2021 as an opportunity for an end-run around the people. Here’s what you need to know about the fight.

 

What’s the problem with an income tax?

Washington is one of nine states without an income tax. We should be glad of that.

Tax advocates have created a phony crisis

Voters keep saying no, so a new strategy aims to cut them out of the loop.

It’s not about fairness — it’s about more-ness

This isn’t about redistributing the tax burden. It’s about making it bigger.

A capital gains income tax would eventually hit all of us

It wouldn’t stop with the wealthy. Taxes on high earners would plummet in the next recession. Where do you think the Legislature would find the money?

A capital gains income tax is an income tax — and why it matters

Semantic games allow the Legislature to avoid an open and honest debate.

You can’t trust what tax advocates say

This issue has a long history, and actions speak louder than words.

 

Just to make everything clear —

Seven Big Myths about the Income Tax

    1. The proposed income tax on capital gains is not an income tax.

      This curious belief is held only by a handful of people, and oddly enough, every single one of them appears to be a member of the Washington Legislature. Under definitions used by every other state, the IRS, even the courts of the state of Washington – yes, it’s an income tax.

    2. It would make our tax system “more fair.”

      Our system isn’t unfair – it does a pretty good job of spreading the burden. It gets a bad rap because of high excise taxes on gasoline, beer, wine, liquor and marijuana. Nobody is talking about cutting those. Meanwhile, legislative Democrats advocate measures that would slam the poor with higher gas and electricity prices. This is hard to square with a “fairness” argument.

    3. It would cause other taxes to be reduced.

      Even if income tax proposals are tied to reductions in other taxes, those taxes can be raised next time the Legislature runs short on money. Only a constitutional amendment can offer protection. Tax advocates oppose that idea, because it would give the people a chance to vote against an income tax for the eleventh time.

    4. It would only hurt the rich.

      Tax advocates say a capital gains income tax would only hurt the rich. That’s not true. Farmers and small business also would be hit. But it’s the next move that ought to worry us. Tax collections would plummet in the next recession. The next move would be to expand the income tax to the middle class. You can ask every state that tried to “soak the rich.”

    5. The state needs the money.

      The state never has enough money to do everything everybody wants. That’s politics for you. But tax collections skyrocketed $20 billion between 2013 and 2020, enough to cover every need. The recent COVID shutdown has produced a temporary downturn in tax collections, yet we still have enough to cover our needs. And we’ll be better positioned for a rebound without heavy new taxes to weigh the state down.

    6. It wouldn’t drive businesses out of state.

      This argument requires us to suspend belief in basic economic principles and ignore the fact that Amazon already has one foot out the door. The state Department of Commerce understands the importance of a favorable tax code. No income tax is a big point in business-recruitment ads.

    7. Only Republicans are talking about an income tax.

      Of all the claims in this debate, this one is the silliest. Everyone is talking about an income tax. Republicans are just being honest about it.

 

The taxes are coming! The taxes are coming!

Published on March 04, 2019
I’ve never seen state government in such good financial shape when the Legislature is needing to adopt a new two-year budget. The Senate and House shouldn’t have any problem coming up with a no-new-taxes budget that is good for mental-health services, and special-education services, which seem to be at the top of the list of... Read More

Inslee misses deadline for releasing real budget – and why that budget is the real story

Published on December 21, 2018
The orcas won’t want to hear this, but the $54 billion budget Governor Inslee brought out last week is not the proposal he was required to submit to the Legislature. Under a state law dating to at least 1959, the governor is to provide a budget document based on “the estimated revenues and caseloads as... Read More

When it comes to taxes and spending, is Inslee insatiable?

Published on December 14, 2018
Governor Inslee had included tax increases in all six budgets he’d submitted to the Legislature during his time in office. I figured he was a lock to make it 7-for-7, in the proposal he’d be putting on the table for 2019. Even so, I was amazed by what the governor unveiled yesterday. He’d spend $54... Read More

Head tax steals spotlight, but Seattle income-tax crusade alive and well

Published on May 18, 2018
A new tax plan from the Seattle City Council is getting all the attention these days – a “head tax” that might best be described as a tax on jobs created by Seattle’s largest employers. But the city’s crusade for an income tax is alive and well and is working its way through the courts.... Read More

Income tax is central feature of House budget proposal

Published on March 08, 2018
Once again, Democrats in the state Legislature attempted to pass an income tax during the 2018 legislative session. Just as in 2015 and 2017, majority Democrats in the House built their budget proposal on the assumption that the Legislature would pass a new income tax on capital gains. This time there were a few new... Read More

Inslee breaks with tradition, fails to propose income tax

Published on December 23, 2017
The governor’s budget proposal for 2018 breaks with tradition — for the first time since taking office, Inslee has failed to propose an income tax. For those who follow the utterances of political leaders, the situation may be confusing. Inslee has said he opposes an income tax. Yet he has repeatedly proposed an income tax on... Read More

Seattle judge rules municipal income tax is illegal

Published on November 22, 2017
In November 2017, a King County Superior Court judge ruled Seattle’s effort to impose an income tax violates state law. The decision was a major blow for those who hope the courts will use the case to overturn the Supreme Court’s 1933 ruling that a graduated-rate income tax is unconstitutional. First Judge John Ruhl decided that Seattle’s... Read More

McCleary and the income tax

Published on May 03, 2017
Published opinion pieces from members of the Majority Coalition Caucus draw the connections between McCleary and the long-running effort to impose an income tax.   Senate Majority Leader Mark Schoesler, in The (Spokane) Spokesman-Review, Jan. 8, 2017: Income tax is the real issue, not schools “This is the cleverest campaign for an income tax ever... Read More

A capital gains tax: First step toward a general income tax

Published on May 03, 2017
Whether a capital gains income tax is constitutional is one issue; whether it would end with that is another. Capital gains income tax revenue is highly volatile, as are other taxes aimed at the wealthy. When the economy goes into a downturn, lawmakers will be left to scramble for new sources of money, as has... Read More

Setting up a test case for an income tax

Published on May 03, 2017
Advocates of an income tax last year managed to collect signatures to place one proposal on the ballot in the city of Olympia. When voters rejected the idea, they took their campaign to the city of Seattle — where the council voted May 1 to direct staff to come up with a detailed proposal. Though... Read More

More resources regarding a state-level income tax

Published on May 02, 2017
Proposals for an income tax — even in the form of a narrowly based tax on capital gains income — are prompting dismay among those who recognize Washington’s unique economy is built around its unique tax structure. Consequences could be dramatic.   Matt McIlwain, Madrona Venture Capital, in Seattle Times, March 15, 2017: More taxation... Read More