It’s a truth long-recognized that the idea of an income tax in Washington state is controversial. But in a novel twist, this year’s income-tax debate is going local with a citywide initiative in Olympia.
OLYMPIA — It’s a truth long-recognized that the idea of an income tax in Washington state is controversial, and as generally acknowledged as saying Puget Sound has a rainy season.
But this year’s philosophical debate over how to bring in revenue is playing out in a novel fashion. Instead of pushing another statewide measure like in 2010, income-tax proponents have gone small — with a citywide initiative here in the state’s capital.
Initiative No. 1 on Tuesday’s ballot would allow Olympia students graduating high school or getting a GED to get up to a year of college free.
Its funding source? A 1.5 percent tax on household income above $200,000 per year for people living within the city limits.
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For those looking to reform the state’s regressive tax system, the initiative would send a clear message that voters — at least some in the state — are serious about finding new ways to fund education.
But the initiative’s detractors argue the proposal, if passed, would be difficult to administer, and could leave the city of Olympia on the hook for legal bills to defend it.
The initiative’s opponents also point to the state Supreme Court’s ruling against an income tax, and to 14 words in state law: “A county, city, or city-county shall not levy a tax on net income.”
Greg Overstreet of the Freedom Foundation, a conservative organization that has vowed a lawsuit if the measure passes, called it “ridiculously unconstitutional.”
“Our participation is designed to prevent an unconstitutional tax from ever seeing the light of day and then spreading to other parts of the state,” said Overstreet, a managing attorney for the organization.
If passed, the Olympia measure might even make its way to the state Supreme Court to see whether that is still the case.
Simone Boe, a 46-year-old Olympia resident who knocked on doors one recent day handing out fliers for the initiative, said she is proud her neighbors are having a conversation about the proposal.
“I come from New York and we had an income tax; like, it was a nonissue that there was an income tax, it was just part of what you did,” said Boe, a union worker and former teacher who has lived in Olympia since the late 1990s. “You want schools, you want roads, you want infrastructure — you pay taxes, and it was not an issue.”
In 2015, about 56 percent of Washington state college graduates had debt upon leaving school.
Washington state has a long, tortured history with the income tax. Voters in 1932 approved a tax on personal and corporate income, but a year later, the state Supreme Court shot it down.
As recently as 2010, voters denied an initiative proposing a statewide income tax on high-earners. Initiative 1098 failed by nearly 2-to-1 and was rejected in every county. But inside Olympia’s city limits, the proposal passed.
Among other things, Heather Weiner, spokeswoman for Opportunity for Olympia, the initiative campaign, describes it as way to signal “voters’ impatience” with the state lawmakers.
“It is, in a lot of ways, a message to the state Legislature,” she said. “They have not done enough to fund education.”
As of Friday, Opportunity for Olympia had raised $231,000, much of it in large sums from King County donors.
But the initiative has drawn opposition from, among others, the city’s mayor, Cheryl Selby, and its City Council.
Selby said that such a tax would be difficult for the city to collect and administer, and that it could drive high-income earners to move beyond the boundaries of the relatively compact city.
“We’re not an island,” said Selby, “we have permeable borders.”
Selby also bristles at the notion that Seattle progressives are trying to use Olympia as a “guinea pig” for a test case to possibly go to the state Supreme Court.
Selby helped form an opposition campaign, Olympians for Responsible Tax Reform, which has raised a little more than $6,000.
There are other cities around the country with their own income taxes, according to Joe Henchman of the nonprofit Tax Foundation. But most of those cities are in the Rust Belt, places like Ohio and Pennsylvania, which already have statewide income taxes, according to Henchman.
An income tax “obviously can raise a lot of money, and do so in a way that a lot of people view as fair,” said Henchman, a vice president with the organization.
As to downsides, Henchman repeated Selby’s concerns: It could cause people to move outside the city limits, and since Washington doesn’t have its own income tax, it could be difficult for Olympia to collect one.
Weiner described those as “the sky is falling” type of arguments, and said that people wouldn’t leave Olympia over a tax on high earners.
If a city “increases the value of its services” with something like a college education program, she argued, it will draw people, not repel them.