Washington's new income tax faces hurdles
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Aïda Amer/Axios
An income tax that Washington's Legislature passed Wednesday night will likely face several challenges — both legal and political — before it can be collected.
Why it matters: State court rulings have interpreted Washington's constitution to bar income taxes that target the wealthy, and Washington voters have repeatedly shot down income tax proposals at the ballot box.
The latest: The measure that cleared the state Senate Wednesday would impose a 9.9% tax on income above $1 million per year, starting in 2028.
- Senate Bill 6346, which supporters call a tax on millionaires, now heads to Gov. Bob Ferguson, who has said he plans to sign it into law.
State of play: A 1933 state Supreme Court decision struck down a voter-approved income tax that targeted high earners.
- But Democrats who control Washington's Legislature are hoping that the state Supreme Court will overturn that 1933 ruling and let the new income tax stand.
Catch up quick: In the 1933 ruling, the state Supreme Court held that income is property. And under Washington's constitution, property must be taxed at a uniform rate.
- A later court ruling found cities could impose a flat income tax — but not one that taxes wealthy residents at higher rates.
What they're saying: That history led many Republican lawmakers to argue the income tax is unconstitutional and urge its rejection.
- The plan would "upend existing state law," state Rep. Jim Walsh (R-Aberdeen) said during a House floor debate earlier this week.
The other side: Democratic leaders argue the 1933 court case is ripe for revisiting.
- "It was a single Supreme Court case from before anybody in this room was alive, on a five-to-four decision that said that income was property," state House Majority Leader Joe Fitzgibbon (D-Seattle) told reporters last month.
- He added that "no other state in the union, nor the federal government" has reached the same conclusion.
- Supporters of the tax argue it will raise much-needed money to support state services and make the state's tax code more fair.
Yes, but: The courts are not the only hurdle the income tax will have to overcome. A ballot measure is likely to be filed to repeal the tax, sending the issue to voters, state Senate Majority Leader Jamie Pedersen (D-Seattle) told Axios earlier this year.
- Opponents of the tax note that Washington voters have rejected income taxes 10 times since the 1930s — most recently in 2010.
- The 2010 ballot measure, I-1098, would have affected individuals earning above $200,000 per year, or married couples earning above $400,000.
- It would have directed the revenue toward education and health care programs, while also reducing property and business taxes.
What we're watching: How soon income tax opponents begin mounting a repeal campaign — and whether Washington voters have changed their minds on the issue, as Pedersen and other Democratic leaders contend.
Go deeper: Why Washington's income tax ban won't block a millionaire tax