Odd city initiative really part of state income tax push

On the surface, the new initiative in the City of Olympia looks like one of the many local initiatives groups have been pushing in this state. We’ve already seen the minimum wage battles in Seatac and Tacoma, the threat of one in Seattle, and public campaign financing ideas (at the statewide level, voters this fall will decide on a statewide minimum wage initiative and a carbon tax initiative).

Still, a new signature-gathering effort in Olympia stands out. Activists are hoping to qualify an initiative on the city ballot that would create a 1.5% income tax on Olympia households earning $200,000 a year or more. Advocates say the money would go toward Olympia college students’ first year of tuition.

That may strike you as an odd initiative. A city income tax for college tuition is certainly a novel concept in our state.

Lurking beneath the issue, though, is the same old cause that animates so much of what the Left in Washington does: instituting a long-desired statewide income tax.

This sounds familiar
Fans of a statewide income tax thought they had the perfect formula worked out. They placed their carefully crafted, focus group-tested Initiative 1098 on the ballot in 2010. They imagined voters would respond positively to a cut in the state property tax, the promise that the funds would be dedicated to education, and the fact that the income tax would only apply to individuals making over $200,000 a year ($400,000 for a couple).

They hoped voters would shrug their shoulders, say “I won’t have to pay it,” and vote yes. Instead, it went down in flames, losing by almost 30 points.

By losing that election (part of a string of defeats of a state income tax on the ballot), advocates also lost out on a vehicle to force the court fight they’ve long hoped for regarding a progressive income tax.

Would today’s Supreme Court overturn precedent?
Income tax advocates desperately need a test case to find out if the current state Supreme Court would reinterpret the state constitution and overturn prior precedent, as I explained in 2015:

The state Supreme Court has repeatedly ruled over the decades that a person’s income is their “property.” Those rulings and the constitution’s requirement for uniform taxes have waylaid the Left’s ambitions for a progressive income tax in Washington. If the state wanted to tax some people’s income at, say, 15%, it would have to tax everyone’s income at 15%.

That’s what this Olympia-only income tax initiative is really about. When income tax backers’ plans were stymied by statewide voters in 2010, they sought a new strategy to set up the test case they need. Taking a page from the pro-1098 playbook, they’ve written an income tax proposal that only applies to high earners and is dedicated to education. Instead of trying again with statewide voters, they’re shopping the same basic idea in one of the more liberal cities in the state.

For what it’s worth, attorney and law professor Hugh Spitzer, who believes the court’s precedent on income taxes should be overturned, predicts the initiative’s supporters won’t get the test case they want:

Spitzer sees the Olympia proposal as a “test case” that will attempt to address the constitutionality of the state’s ban on an income tax. However, he predicts that a court will rule that code cities such as Olympia cannot tax individual income.

“People will wind up being quite disappointed,” Spitzer told the council.

If he’s right, the question of how the court would regard prior precedent will remain an unknown. That will merely put state income tax supporters on the hunt for a new test case to get what they want.
-Rob McKenna

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Rob McKenna
Rob served two terms as Washington’s Attorney General, from 2005 to 2013. He successfully argued three cases before the U.S. Supreme Court and negotiated three of the largest consumer financial protection settlements in national history, all involving mortgage lending and servicing. He is a recognized leader in the development of consumer protections on the internet, in data protection and privacy regulation.