Legislature holds hearing on initiative to ban income tax in Washington

Feb. 28—As lawmakers consider the potential adoption of three initiatives to the Legislature, a proposal to explicitly ban an income tax in Washington was the subject of a hearing in the Finance and Ways & Means committees.

Ahead of the hearing, more than 6,000 people signed in support of the initiative, while nearly 200 opposed it. The hearing was the first of three the Legislature will hold this week. On Wednesday, lawmakers heard arguments on a parental bill of rights and reforms to police pursuit requirements.

On Tuesday, supporters of an income tax ban argued the long-standing lack of an income tax in Washington is a competitive advantage that could be threatened.

"It's a good policy. It's a good proposal," sponsor Rep. Jim Walsh, R-Aberdeen, said. "It emphasizes the best part of our fiscal house."

The proposal, Initiative 2111, is short, only 53 words long. According to staff, I-2111 doesn't "explicitly" say whether it would retroactively apply. According to staff, the proposal also would not impact local or state revenues and would not repeal or impact existing programs.

That simplicity, Walsh said, is by design. Walsh, who introduced the measure, said the proposal would codify a "long-standing tradition" of not taxing income.

Still, according to staff, the proposal could face legal challenges. Gross income in the proposal is tied to the federal definition, not a state definition, which could open potential challenges since the Legislature cannot delegate its responsibilities to other entities. The legislation is presumed constitutional, and it would be the duty of a challenger to prove otherwise.

Smith, a partner at Pacifica Law Group in Seattle, testified to his concerns over the proposal.

"The initiative is unnecessary and it will have no demonstrable impact on the tax law today, or taxpayers today," Smith said. "It is well known that Washington state does not have an income tax. And the measure does not purport to, and does not in fact change, any existing tax."

While the initiative is short, Smith said it is "poorly written and confusing," and its design could confuse voters.

"If this measure were to move to the ballot, voters may be misled into thinking they are voting on something that would have a material impact today," Smith said, "when in fact, this measure, if enacted, would have no impact on our tax code, or taxpayers, today."

According to Steve Gordon of the Concerned Taxpayers of Washington State, taxpayers don't "necessarily feel like they're getting value to their tax dollars."

Gordon said the challenges Washington faces are not due to a lack of funding, and that the initiative should have been unnecessary.

"The people have been very clear on multiple occasions (that) Washingtonians do not want an income tax," Gordon said. "However, obviously, 450,000 people decided they need to make that message clear."

During the hearing, detractors said the Legislature must act to fix Washington's "upside down" tax structure while funding state programs.

"It does nothing to increase investments in the programs that help people live healthy lives," said Charles Mayer, of the Washington Physicians for Social Responsibility. "I urge this Legislature to spend time on things that make meaningful health differences to the people of Washington, and not this do-nothing proposal."

The three initiatives heard this week are scheduled for executive sessions in their respective committees in both chambers on Friday morning.

The three measures not getting public hearings are Initiative 2109 to repeal the capital gains tax, Initiative 2117 to repeal the Climate Commitment Act, and Initiative 2124 to allow more people to opt out of the state's long-term care program. Those will likely be decided by voters during the November general election.