A proposed constitutional amendment banning state or local taxes on individual incomes failed to garner the necessary two-thirds majority vote in the State Senate on Tuesday, March 7 to advance. However, SJR 8204 may still have accomplished another objective desired by its sponsors: having lawmakers clarify where they stand regarding an income tax in Washington state. Several failed amendments to the bill and remarks exchanged legislators prior to the vote indicated that some favor a high earner income tax as a potential new revenue source.
Removing Ambiguity On Income Tax Stance
“This is a very important issue,” State Sen. Michael Baumgartner (R-6) said March 7 on the Senate floor. “What we really need to do here is flush this issue out, because it is confusing when we hear people sometimes say they want an income tax and sometimes not want an income tax. And right now, we have need to figure out how we’re going to fund our state’s budget, and we have a lot of spending proposals that are far in excess of what we have for expected revenue.”
All Senate Majority Coalition members voted in favor of SJ 8204, with Senate Democrats Steve Hobbs (D-44) and Democratic Assistant Whip Mark Mullet (D-5) also in support. The bill was sponsored by State Sen. Phil Fortunato (R-31). Its House companion bill HJR 4207 remains stalled in the House Finance Committee.
Legalizing Progressive Income Tax Through Judicial Fiat
The vote came as new local efforts are underway to impose a progressive income tax that supporters hope will prompt a court challenge ultimately overturning previous State Supreme Court rulings defining income as property in the State Constitution.
‘We currently have a very activist court,” Senate Majority Leader Mark Schoesler (R-9) said during the March 7 floor debate. “Many groups have tried to take advantage of the possibility that an activist court would rule different on a local income tax or a state income tax. I say this pass this constitutional amendment today and give the people their voice.”
Attempts to legalize a progressive income tax through the judiciary has gained traction among activists after Washington voters overwhelmingly rejected a progressive income tax in 2010, the ninth time they have done so.
Fortunato: Bill Sends Message That Taxpayers Are Heard
Fortunato told colleagues March 7 that “this is really just a very simple bill. The people have repeatedly said we don’t want an income tax. But we have to ask ourselves, who down here is actually representing the taxpayer? This sends a clear message to the taxpayers that we have heard that what they said. They want to keep their money; they don’t want an income tax.”
Democratic Floor Leader Sen. Marko Liias (D-21) proposed an amendment that would have applied the ban only to annual incomes less than $250,000. He told colleagues that this would “clarify that we’re talking about income taxes on working class people.”
“I think a view that most of us hold here on the floor (is) that working class people, middle class people, shouldn’t be exposed to additional taxation. We’re paying our fair share already,” he added.
Prior to the vote on that amendment rejecting it, State Sen. Doug Ericksen (R-42) warned that “if you have an income tax, that impacts everybody, that gets passed on. The idea that moving away from a sales tax to an income tax would not harm lower class or lower income people that’s just simply not true.”
He added that “you would see people paying higher taxes at all levels with the income tax, which I think is actually the goal, which is to get more money for the state where the people have said they don’t want to be paying an income tax.”
Granting Local Autonomy On Income Tax
State Sen. Jamie Pedersen (D-43) proposed another amendment would have had the prohibition only apply to income taxes imposed without prior voter approval.
“We definitely have political subdivisions within our state that are exploring and interested in the idea of using income tax to balance out our very unfair tax system,” he said. Referencing a new effort in Seattle to create a progressive income tax, he added that “with this amendment, that would be possible as long as the voters of the city of Seattle decided to do that.”
State Sen. John Braun (R-20) opposed the amendment, arguing that “what makes us (Washington State) regressive, it’s not the lack of an income tax. It’s the cigarette tax. It’s the highest liquor tax in the country. It’s the highest gas tax in the country. These are the things that actually make Washington tax’s system the most regressive in the country, and I don’t hear us talking about that.”
A third amendment proposed by Democratic Leader Sen. Sharon Nelson (D-34) would have required a two thirds majority vote by the legislature for any new state gross receipts (B&O) tax incentive.
State Sen. Marilyn Chase (D-32) said although “I’m really opposed to a B&O tax…this is an amendment whose time has come.” Last year, she introduced SJR 8214 calling for a constitutional amendment allowing a progressive income tax.
However, Ericksen argued that “this amendment says that basically all money belongs to the state, all the wealth belongs to the state, and they’ll make a decision on how much they’ll allow you to keep.”
Critics: Proposed Constitutional Amendment “Pointless”
Following the rejection of the three proposed amendments, Liias said “To me, the serious challenges that our state faces are not a joke. They are a serious problem. Here we are, approaching the 60th day (of session), and we’re talking about something that in my opinion is utterly pointless. We actually tried to propose some ideas to take this pointless bill and make it meaningful.”
However, Baumgartner replied that the debate served “to understand where people really come down on the tax proposal and what they truly believe.”
“If you don’t like it (income tax), say so clearly, but come forward with a tax proposal you truly believe in,” he added.