Despite Washingtonians consistently and overwhelmingly rejecting income taxes and the Legislature in 2024 enacting I-2111 to prohibit state or local income taxes, some lawmakers in the Evergreen State are again pushing for an income tax this year. The proposals are initially structured as a 9.9% income tax on "millionaires." Nearly 100 years of state supreme court legal precedent in Washington, however, prohibits a non-uniform income tax in excess of 1%.
Here are seven questions lawmakers should answer about this income tax proposal:
Prior legislatures understood that to impose a non-uniform income tax in excess of 1%, a constitutional amendment was required, as occurred (though rejected by the people) in 1934, 1936, 1938, 1942, 1970, and 1973.
Sen. Jamie Pedersen, one of the income tax sponsors, said this about the proposal: “We want the state Supreme Court to reconsider its ruling. That is not a bug; that is a feature of the proposal.” As the state supreme court noted in 1960, however, an income tax should be decided with a constitutional amendment: “The argument is again pressed upon us that these cases were wrongly decided. The court is unwilling, however, to recede from the position announced in its repeated decisions. Among other things, the attorney general urges that the result should now be different because the state is confronted with a financial crisis. If so, the constitution may be amended by vote of the people. Such a constitutional amendment was rejected by popular vote in 1934.”
Prior income tax proposals (though rejected by the people), such as the 1973 proposed constitutional amendment, would have prohibited excess school levies in exchange for an income tax.
If adopted, this would be one of the highest income tax rates in the country and region.
As noted by Washington’s January credit rating by S&P: “Sales-tax-based revenue structure, which has demonstrated less sensitivity to economic cycles than that of income-tax-reliant states.” California’s Legislative Analyst’s Office also warns: “This revenue volatility has contributed to major problems for state policymakers attempting to manage and balance California's state government budget... California's heavy dependence on the volatile PIT (Personal Income Tax) has been especially important…this progressive structure also magnifies the effects on revenues of the earnings volatility of higher income households.”
Especially in the context of Washingtonians rejecting 10 straight income tax proposals, wouldn’t it be more respectful of voters to proactively send this tax to the ballot for their consideration instead of explicitly prohibiting a referendum?
This is especially concerning when one of the income tax sponsors, Sen. Pedersen, said this about repealing the I-2111 income tax ban adopted in 2024: “That was — what did Mary Poppins call that? — a ‘pie crust promise.’ Easily made, easily broken. We put that language into statute, and we can amend it any time we want to. I wouldn’t take that super-seriously.”
The income tax proposals in Washington are Senate Bill 6346 and House Bill 2724.
Regardless of the actual details and potential fiscal impacts of the proposed income tax, if Washington lawmakers truly respect the rule of law, this proposal should be restructured as a constitutional amendment.
Jason Mercier is Vice President and Director of Research of Mountain States Policy Center, an independent research organization based in Idaho, Montana, Eastern Washington and Wyoming. Online at mountainstatespolicy.org.
