In Our View: A Taxing Loophole

Voters have resolutely said no to a state income tax; cities should respect that

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The need for a bill introduced by state Rep. Brandon Vick, R-Vancouver, is disappointing — and yet that need exists.

House Bill 2212 would prevent local governments from enacting an income tax upon residents. “Most feel the law is clear on this issue — no local income tax allowed,” Vick said. “Given the recent action of some local governments, that is not the case, and we need a strong and concise law to put a halt to this discussion.”

Indeed. Despite what appears to be settled law, the Seattle City Council is pursuing a local income tax. While it is tempting to think that if Seattle’s elected representatives want to tax local citizens that is their purview, it must be noted that what happens in Seattle doesn’t stay in Seattle. The city is the economic and cultural engine that drives the entire state, and all Washingtonians have a vested interest in that city’s business climate. In addition, if council members there succeed with their plan, it will open the door for other city or county governments to pursue similar action.

All of this calls for a little history lesson into the reasons why Washington is one of nine states without an income tax. In 1933, during The Great Depression, voters approved a state income tax, but it was deemed unconstitutional the following year by the state Supreme Court. In 1984, the Legislature, led by Sen. Hal Zimmerman of Camas, passed a law that reads, “a county, city, or city-county shall not levy a tax on net income.” Meanwhile, Washington voters over the years have rejected a proposed income tax on seven occasions, the most recent coming with 64 percent of the vote in 2010. That measure failed in all 39 counties.

In other words, Washington residents have made it clear that they do not desire an income tax, a fact that makes Seattle’s attempt at an end run disconcerting. Believing that they have found a loophole in the law, councilors there are proposing a tax upon “adjusted gross income” rather than “net income.” Basing the idea upon semantics rather than state law would ensure a lengthy and costly court battle while ignoring the oft-stated will of voters throughout the state.

If Seattle’s leaders wish to impose an income tax, they should seek to change the state constitution or revise state law rather than exploiting a loophole.

Undoubtedly, Washington’s tax system — often called the most regressive in the nation — is in need of revision. But with the Legislature grappling to find a way to fund public schools, and with various changes to property tax levies and school levies being considered, some changes might be in the works. It would be prudent for local governments to see what comes out of Olympia before attempting to seize a robust taxing authority of their own.

Whether rejecting an income tax or supporting lower vehicle fees or limiting property tax increases, Washington voters frequently have expressed a desire to limit taxes. This is the result of decades of excessive increases and not an invitation for government to find creative ways to work around those limits. But Olympia placed an income tax measure on the ballot last year — it was rejected — and now Seattle is making its own attempt.

All of that is what makes Vick’s bill necessary. “Cities such as Seattle and Olympia seem to be confused or simply do not care where the public stands on this issue,” Vick said. House Bill 2212 would help remind city governments of that public stance and help make sure those governments are listening.