On 10 occasions, Washington state residents have voted down proposals to create income taxes in Washington state and, until Friday, the state constitution was always interpreted to prohibit the Legislature from passing a progressive income tax without a public vote.
But the governor, Democrats in the legislative majority and the state supreme court have worked as a team to create a progressive income tax. You no longer have the right to vote on it.
As of Friday, without a vote of the people, Washington has an income tax.
They don’t call it an income tax. They call it a capital gains excise tax. They promise that only the rich will pay the tax. The rich — not you. Just trust them. You don’t need that constitutional right of a vote to protect you. The people in power in Olympia will protect you instead.
And would you like to buy some ocean front property in Arizona? No? So you understand that we will end up paying this tax.
The tax will require that a person selling a capital asset pay 7% of the value to the state. Your house and retirement accounts are capital assets. So is a farm or a stand of Christmas trees. The local drive-through coffee stand is a capital asset just like every other business. For now, the new capital gains tax law exempts these assets. But these assets are built from people’s income. You pay for your house out of your income, just like your retirement account. That makes this capital gains excise tax, in truth, a tax on income. Now, as of Friday’s decision of the state supreme court, without a vote of the people, the Legislature and governor can tax the sale of your capital asset, and at whatever rate they choose. Before Friday, the state could not impose a progressive income tax without a vote of the people. Today, by calling it a capital gains excise tax, that protection has been burned to ash. Washington now has an income tax.
The team in Olympia that made this happen say “today the capital gains tax doesn’t apply to you. You are exempted. Only rich people will pay when they sell their capital assets.” But this same Olympia team already has legislation introduced to expand this tax and increase the rate, and the constitution will no longer be interpreted to protect you. And your past votes against this tax mean nothing. Even when 62% of Washington voters said with their ballots in 2021 that this tax should not be imposed, the Olympia Income Tax Team said, “We don’t care.” It passed into law and Friday the supreme court turned our constitution on its head. Now the tax will be collected beginning this year.
How did this happen?
The “capital gains excise tax” passed by the legislative majority last year would, in every other state in America, be called what it actually is: an income tax. Opponents challenged the tax as unconstitutional under Washington law. A superior court judge agreed and struck the law down pointing out that under the state constitution “all state taxes must be uniform upon the same class of property.”
For decades, Washington’s supreme court ruled that taxing net income from any source was an income tax. But Friday, the Washington Supreme Court which is made up of all Democratic Party adherents, just like the governor and legislative majority, tossed aside 10 public votes and decades of settled law and ignored the plain words of the constitution and the superior court judge’s ruling and made their own law instead. They said that this capital gains excise tax on income is constitutional.
And, mark my words, very soon you will pay this new tax.
On Friday this court wrote: “Washington’s tax system has earned the regrettable title of most regressive in the nation. The poorest individuals bear the greatest tax burden due in large part to our heavy reliance on sales taxes and the lack of a graduated income tax, with low wage earners paying nearly six times more in state taxes as a percentage of personal income than Washington’s wealthiest residents.”
The people who have run Olympia for decades want you to believe this is about “fairness.” When they say “regressive,” they mean that when a single mom in Onalaska and Bill Gates buy the same brand of flashlight, they both pay the same state sales tax on that purchase. The 50 cents in state tax the mom pays is obviously more of her net worth than his. And that isn’t fair, so we should tax the rich more, right? That’s their public argument.
But they know that rich people already pay a lot more in state taxes even if they pay the same sales tax rate as the Onalaska mom. When wealthy people buy their car or boat or sell their house, the state makes gobs of money. The people in power in Olympia know a rich person can change their state residence in a heartbeat if taxes here get too high, but the Onalaska mom can’t. They could lower the tax paid by the Onalaska mom. That would help her directly. But that is no part of their plan. The Income Tax Team in Olympia isn’t lowering the sales tax on the flashlight to put more money into mom’s pocket. They want her money too. Instead, they want a broad-based income tax. And, as of Friday, they can expand the tax on income. You have no say.
The Onalaska mom isn’t getting a tax break, so is she supposed to feel better because others will pay higher taxes? Will her life be improved when businesses leave this state? Hardly. If everybody is poor and we all pay the same taxes, then the system isn’t regressive anymore. If wealthy people move away, we won’t have such a “regressive” tax system, but will the Onalaska mom, or the Tacoma mom, be better or worse off then? In a few years, when the Legislature has voted to add this tax to home sales and mom sells her house and pays this state capital gains excise tax, will she be better off?
They say it’s about “fairness.” But it isn’t. It is about money and power. It’s taking our money to increase the government’s power. It is about taking our right to vote on a tax and giving it to themselves. They know that if you got to vote, people in this state would vote “no” again. It’s tossing protections for citizens which, until Friday, were embedded into the state constitution and a century of legal precedent.
These are means justifying their end. Nevermind the constitution. Nevermind what you think. The people who put this new tax in action know what you think and that’s why the Income Tax Team did all of this, to freeze you out of the decision from now on.
They know better than you what to do with your income. They want more of your money. And they will rewrite the law and the state constitution to get more of it.
Chad Taylor is publisher of The Chronicle and CT Publishing. He and his wife, Coralee Taylor, are the owners of The Chronicle. They can be reached at firstname.lastname@example.org.