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.
Washington is one of nine states without an income tax. We should be glad of that.
Voters keep saying no, so a new strategy aims to cut them out of the loop.
This isn’t about redistributing the tax burden. It’s about making it bigger.
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?
Semantic games allow the Legislature to avoid an open and honest debate.
This issue has a long history, and actions speak louder than words.
Just to make everything clear —
Seven Big Myths about the Income Tax
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.
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.
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.
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.”
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.
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.
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.