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Hearings on initiatives off to a quiet start in Olympia with measure to bar income tax

By Claire Withycombe, The Seattle Times
Published: February 28, 2024, 8:01am

OLYMPIA — Washington doesn’t have a state income tax, and a resident-backed initiative that lawmakers heard Tuesday would keep it that way.

This proposed reinforcement of the status quo kicked off a new stage in the ongoing saga of a slate of GOP-backed citizen initiatives before the Legislature, some of which could be headed to the November ballot.

Since the session started in early January, Republican lawmakers have pushed for public hearings on all six initiatives, most of which challenge key priorities of majority Democrats, such as the state’s cap-and-trade system to limit greenhouse gas emissions.

Leaders have said they will only hold hearings on three of them — a hearing doesn’t mean legislators will necessarily act on a measure, but it signals they could.

Tuesday’s hearing on the income tax measure marked the first formal and public airing of the initiatives as the Legislature barrels toward its conclusion March 7. Though well attended, it went off with little fanfare, underscoring that among the six initiatives, it might be the least contentious.

If passed, Initiative 2111 would essentially cement the state’s existing practice of not having an income tax by prohibiting both the state and local governments from imposing income taxes.

“Initiative 2111 is designed to do one thing, and that is codify in law the state’s longstanding tradition of not having an income tax based on personal income,” said Rep. Jim Walsh, R-Aberdeen, who filed the initiative and the five others.

In Washington, a graduated income tax, where people would pay a tax rate that would vary based on their income, doesn’t pass constitutional muster.

With a little over a week left in the legislative session, lawmakers could decide to pass each initiative into law as is, pass an alternative policy to appear alongside the original initiative on the ballot, or decline to act, in which case the initiative would go straight to voters.

Rep. April Berg, D-Mill Creek, chair of the House Finance Committee, ran Tuesday’s hearing and said committee chairs wanted to set an “informative” tone for the hearings, which continue Wednesday.

For Tuesday specifically, Berg said her biggest concern was holding a fair hearing. When you go to the Legislature’s website, she said, the sponsor of Initiative 2111 isn’t one of her colleagues in the House or Senate, but “the people of Washington.”

“You want to make sure that you’re directing traffic, you’re calling balls and strikes and you’re having a really good, fair hearing,” Berg said. She interrupted testifiers a few times to remind them to keep on topic.

Legislators began Tuesday’s hearing with a briefing from policy staff, and some members followed up with questions. The hearing was limited to an hour, and more than 20 people testified. But thousands of people had signed into the Legislature’s system indicating their stance on the initiative, the majority in support. About 6,000 people signed in favor of the measure; about 670 people signed in against the measure.

Washington voters have rejected attempts to create an income tax at the ballot many times, according to the Washington Policy Center, a conservative think tank.

“Adopting this initiative would show respect for workers who have turned down an income tax nearly a dozen times,” testified Elizabeth Hovde, of the Washington Policy Center.

Some opponents of the initiative argued that the Legislature’s time was better spent working on other issues, and some said they were relieved that the initiative wouldn’t affect the state’s Paid Family and Medical Leave program.

Marcy Bowers, executive director of the Statewide Poverty Action Network, told lawmakers that the initiative wouldn’t “do anything for Washingtonians.”

“Our time should be spent making changes to the tax code that benefit the people and families who need the support the most,” Bowers said.

Democrats, who hold strong and growing majorities in the Legislature, have been vocal about trying to pass policies to change what they describe as Washington’s regressive tax system, where low- and moderate-income residents face a higher tax burden relative to their income than wealthy Washingtonians. Republicans have pushed for broad-based tax relief in light of the state’s skyrocketing cost of living.

In 2021, legislators passed a tax on capital gains, which one of the initiatives would repeal. The 7% tax applies to profits from the sale or exchange of certain assets above $250,000. That tax was upheld by the Washington Supreme Court in early 2023, which deemed it an excise tax.

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The Legislature has also recently begun to fund a state tax credit for low- and moderate-income families, known as the Working Families Tax Credit. (Efforts to fund the credit have drawn bipartisan support.)

Berg said she didn’t foresee the initiative to bar an income tax as having “any impact [on] any future progressive revenue conversations.”

Although it’s not yet clear what will happen next on the income tax initiative, the House Finance and Senate Ways and Means committees are each slated to consider it for a vote Friday. It would need to pass in each chamber to become law.

Two other measures — one to require parental notification when students receive medical care at school and guarantee access to students’ curriculum and another to lift restrictions on when police can chase suspects — are scheduled to be heard Wednesday.

But three other initiatives — the one to repeal the state’s capital gains tax, the one to repeal its carbon market and another to make optional a payroll tax to fund the state’s long-term care insurance program — won’t get hearings, almost surely leaving those choices to Washington voters in November.