Camden: Tax initiative raises questions

That’s likely because other potential ballot measures have been filed by serial initiative sponsors such as Tim Eyman and state Rep. Jim Walsh, R-Aberdeen, who take a shotgun in the dark approach to ballot measures, firing multiple times at various targets in hopes of hitting something.

This particular effort — or at least the political action committee that spawned it and shares the name “Repeal The Capital Gains Income Tax” with the proposed title of the initiative — has high-powered lobbyists, lawyers and public relations firms behind it. The PAC has raised some $47,000 since being formed in December, spent about $39,000 and racked up an impressive $108,000 in debts to people who aren’t in the business of giving free advice or services to political campaigns.

“It sure looks like that’s an initiative to watch,” said Treasure Mackley, executive director of Invest in Washington. Progressive groups got a capital gains tax that hit the state’s high-income investors through both chambers of the Legislature last year.

It was immediately challenged in court. Earlier this month, Douglas County Superior Court Judge Brian Huber ruled that the law as written is an unconstitutional income tax, rather than a legal excise tax as the state and supporters argued.

The legal arguments are going to the state Supreme Court, which is unlikely to uphold or overrule Huber by Nov. 8, when the initiative would be on the ballot.

Most successful grassroots initiative campaigns — the ones that rely on volunteers and shoe leather to get the needed signatures — start sometime in January to have at least five months to get enough petitions signed. Those who rely on paying signature gatherers a bounty to collect the names can start much later and still get more than enough names.

The timing brings up some interesting political questions. With the capital gains tax technically dead, or at least on life support under Huber’s ruling, will voters be unconcerned enough to ignore petition hawkers and campaign arguments? Or will the state’s long-established aversion to an income tax carry over to a tax that may or may not be an income tax that only affects a fraction of the public?

Will initiative supporters be able to call it a “capital gains income tax” in the ballot title? Or will the attorney general’s office, which will represent the state in the appeal of Huber’s decision, insist on dropping “income” out of the title or synopsis?

Opponents are likely to bring up the state’s regressive tax system, relying on the sales and property taxes, under which lower-income residents pay a larger share of their money for taxes than those in the upper incomes.

“The wealthy need to pay their fair share. We believe the voters are with us,” Mackley said.

Initiative supporters are likely to point to last year’s tax advisory question, in which 61 percent said the Legislature should repeal the capital gains tax, as proof the voters are with them.

“Supporters of the tax also claim it will only apply to a small number of wealthy people, but in fact the Legislature can expand this tax with a simple majority vote to apply to everyone,” said Mark Funk, a spokesman for the initiative effort.