October 26, 2010

Washington Voters to Consider High-Earner Income Tax

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 tax 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 income 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.

A 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.