Why Washington's income tax ban won't block a millionaire tax
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Washington state lawmakers' decision to pass an income tax ban in 2024 paved the way for a proposed millionaire tax unveiled this week.
Why it matters: Had voters approved the 2024 initiative to ban income taxes, a two-thirds vote of the Legislature would have been needed to change it for two years — putting a millionaire's tax out of reach this session.
Yes, but: Because legislators enacted the ban themselves, they now can alter — or even repeal — it this year with a simple majority vote, which Democrats hold in both chambers.
Driving the news: Democratic leaders on Tuesday formally introduced their bill to impose a 9.9% tax on income above $1 million — a plan that would directly amend the 2024 income tax ban.
Between the lines: The plan is not sitting well with Republicans.
- Passing an income tax on high earners this year "would undermine a law created by the most direct form of democracy: Washington's initiative process, which is the 'first power' given to the people under our state constitution," Senate Republican Leader John Braun (R-Centralia) wrote in a recent op-ed.
Context: The 2024 income tax ban was filed as a citizen initiative to the Legislature, giving lawmakers a crack at passing it before it would otherwise go to voters.
- State Senate Majority Leader Jamie Pedersen (D-Seattle) told Axios that Democratic leaders expected the income tax ban would likely pass at the ballot box, and wanted to preserve the ability to amend it without triggering the two-thirds vote requirement.
What they're saying: The goal wasn't to clear a path for an income tax on millionaires, Pedersen said, but to ensure the Legislature could step in if the ban were used to challenge other taxes, such as Seattle's payroll expense tax or the state's long-term care payroll tax.
- He argued the ban didn't meaningfully change Washington law, which already has no income tax on the books and has long been interpreted by courts as barring one.
- As such, Democrats gave up little by passing it themselves, Pedersen said.
- "It literally changed nothing in the law — it was sort of a statement of policy," he said.
The other side: Republicans have pointed to Democratic leaders' attempt to rewrite the income tax ban as a sign they may later try to extend the millionaire's tax to more people.
- "Remember this when Democrats claim their income tax will apply only to a certain income level, or that they'll lower other taxes in exchange for a state income tax," Braun wrote in a blog post last month.
Flashback: Last year, Washington lawmakers amended another citizen initiative they passed in 2024 — Initiative 2081, which dealt with parents' rights in public schools.
- A new ballot measure aims to undo those legislative changes.
What we're watching: Whether lawmakers increasingly choose to pass citizen initiatives themselves and then revise them within the first two years, rather than sending them to voters.