Voters in the city of Olympia, Washington, will decide whether to impose an income taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. on themselves, at a rate of 1.5 percent on income above $200,000, although you’d hardly know it from the ballot language.
Initiative 1 is listed on the ballot as “establishing and funding a college grant program.” The next two lines discuss who will be eligible to receive tuition grants, and only then does the explanation clarify that it will be funded by a new tax of 1.5 percent on incomes above $200,000, as measured by the federal internal revenue code. Back in September, local judge Anne Hirsch struck the phrase “income tax” from the explanation, arguing that use of the term would prejudice voters against the initiative. The local paper also refers to the measure as a “college tuition tax measure.” Consequently, voters who rely on the one-sentence explanation rather than reading the full paragraph may miss that they’re actually voting on an income tax.
A bigger question is the legality of an income tax in Washington state. An initial problem is an unambiguous state law banning counties or cities from taxing income. Beyond that is a 1933 state supreme court decision concluding that a graduated state income tax violated Washington’s constitution. Citing a state constitutional provision expansively defining property as everything and a separate constitutional provision requiring uniformity in taxing property, the Court concluded that an income tax applying different rates to different income levels violated uniformity and thus could not be sustained. The dissent argued that the equating of income and property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. es was “sheer sophistry,” but said regardless, the matter should be left to legislative discretion. The case, Culliton v. Chase, has never been overturned, with voters rejecting efforts to enact a state income tax on nine occasions, in 1934, 1936, 1938, 1942, 1944, 1973, 1975, 1982, and 2010. Washington voters seem to like not having an income tax.
The Olympia City Council had refused to put the measure on the ballot, saying the income tax would fail a court challenge if enacted. Supporters gathered the signatures and put it on the ballot anyways. Perhaps they think the 1933 Washington Supreme Court decision is wrongly decided and the current court would rule differently. If I were a judge, I wouldn’t even get to that question because of the state law ban on local income taxes.
When Olympia voters consider Initiative 1, they should keep in mind that it’s an income tax proposal and that legal challenges will likely follow.
More entries in our series on Top Ballot Initiatives to Watch in 2016.Share