A history of the income tax in Washington state
Faced with the state’s current budget crisis, lawmakers have raised the possibility of an income tax. The idea has been debated for years, but this discussion is more than a mild flirtation. Senate Majority Leader Lisa Brown and House Speaker Frank Chopp have both signaled a willingness to test the voters’ appetite for a new tax structure.
But is an income tax constitutional? Would the law require a constitutional amendment? These are questions lawmakers are now wrestling with. The state income tax has had a troubled history in Washington, and any new proposals would have to clear the exceedingly-high hurdles of constitutional review and voter approval. The Washington Supreme Court has struck down numerous income tax laws, and voters have rejected eight measures in the last 75 years.
- 1932 – Voters adopt a graduated income tax. Initiative No. 69.
- 1933 – Supreme Court strikes down the income tax as unconstitutional. Culliton v. Chase.
- 1934 – Voters reject constitutional amendment allowing for income tax.
- 1935 – Legislature adopts a 3% net income tax. Personal Net Income Tax Act of 1935.
- 1936 – Supreme Court strikes down Personal Net Income Tax Act. Jensen v. Henneford.
- 1936 – Supreme Court strikes down corporate net income tax. Petroleum Nav. Co. v. Henneford.
- 1936 – Voters reject constitutional amendment SJR 7 allowing for income tax.
- 1938 – Voters reject constitutional amendment SJR 5 allowing for income tax.
- 1942 – Voters reject another income tax measure.
- 1951 – Legislature adopts a 4% corporate excise tax. Laws of 1951, Extraordinary Session, chapter 10.
- 1951 – Supreme Court rejects the corporate excise tax. Power, Inc. v. Huntley.
- 1970 – Voters reject constitutional amendment HJR 42 allowing for income tax.
- 1973 – Voters reject a HJR 37, providing for corporate and personal income tax, by a 3-to-1 margin.
- 1975 – Voters reject Initiative 314, a 12% corporate income tax proposal.
- 1982 – Voters reject Initiative 435, a corporate income tax proposal.
If the Legislature adopts an income tax, only one thing is certain: the issue will come before the Washington Supreme Court. Public finance attorney Hugh D. Spitzer of Foster Pepper has suggested that the common perception that an income tax is unconstitutional may not be accurate, as the case law guiding the Supreme Court in Culliton has since been overturned. But will that reassure lawmakers who have to sell the idea to the voters of Washington?
(Note: Phil Roberts has written an exhaustive review of the income tax in Washington state: A Penny for the Governor, a Dollar for Uncle Sam, 2002.)
The Democratic party in our state and nation never saw a tax it did not like!
It is all about CONTROL.
This article would be better if it had links to the cases referenced and an explanation of what case law changes would today overturn the Culliton v. Chase case. It is not clear if the case's foundation was struck down by other Washington Supreme Court rulings or if the federal court system overruled the Washington Supreme Court.
The City and County of Denver, CO, was barred from collecting an income tax, so what Denver did was approve a monthly head tax for each employee with the cost split between the employer and its employees working in Denver, CO. That tax collected the revenue an income tax wss expected to bring in the first yeare. The Colorado Supreme Court upheld the legality of that and ruled a head tax (based on number of employees) was not even a proxy for an unconstitutional incme tax.
The City on a Shining Hill comment is hard to respond to because the truth is not so black and white. Having worked in a different state's government and been involved in budget changes with the ebb and flow of federal policy, the truth is that Democrats are more generous in funding overall, but they demand accontability (reports) in return showing how the money is spent. Republican Presidents have favored spending cuts in social programs in return for virtually no accountability and often further periodic reductions in grants for welfare and services.
At the federal level Democrats have raised taxes in general to match actual spending, while in general the Republicans have instead lowered taxes while borrowing the money lost that way without radical changes in federal grant funded services. During the 8 years of President G. W. Bush, Republican tax cuts (and to a surprisingply small extent war spending) nearly doubled the National Debt as a percentage of all the goods and services produced in the United States (GDP).
At the state level in Washington, Republicans accused the Democrats in charge of the legislature with sharp increases in spending when all they did was prudently appropriate some state revenue before the Great Recession to program specific reserves funds for support of K-12 education, etc. That small cushion reduced the Great Recession's immediate job cuts in government.
like K-12 education funding.