Download Special Report No. 186
Special Report No. 186
Key Findings
• If Initiative 1098 passes, a constitutional challenge to the law is likely and would have strong arguments and precedents.
• Since the income tax was ruled unconstitutional in Washington, Evergreen State voters have rejected constitutional amendments to adopt 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. in 1934, 1936, 1938, 1942, 1970 and 1973. The vote in 1973 was 77% against the tax despite approval by the legislature and the governor.
• Washington would be the first state since Connecticut in 1991 to enact a personal income tax.
• Comparative rankings of state tax climate by the Tax Foundation and other research groups uniformly praise Washington’s current system of forgoing a tax on wages and other income, and those rankings would plummet if a personal income tax is enacted.
• Washington’s new income tax would be out of the norm in two respects: it will apply to all adjusted gross incomeFor individuals, gross income is the total pre-tax earnings from wages, tips, investments, interest, and other forms of income and is also referred to as “gross pay.” For businesses, gross income is total revenue minus cost of goods sold and is also known as “gross profit” or “gross margin.” with no exemptions or deductions, and it will apply only to high-income earners.
• Just as several other states are overturning so-called millionaires’ taxes or allowing them to expire, Washington would be adopting one.
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