Why State Democrats Might Pass an Income Tax Ban

The Washington State Legislature’s joint fiscal committees listened to testimony Tuesday afternoon about Let’s Go Washington’s Initiative 2111, which would ban a statewide or local income tax. With input from both sides of the debate, the House and the Senate may decide to pass I-2111 outright or put it to a vote of the people in November. 

Technically, the initiative would not change anything. We don’t have an income tax, and eat-the-rich legislators can’t pass a progressive one without changing the constitution.

But politically, the unpopularity of an income tax could galvanize the right for the 2024 election, bolstering conservative turnout for Let’s Go Washington’s other initiatives, the open seat for Governor, and the tight race for President, presumably between Israel fanboy Joe Biden and attempted insurrectionist Donald Trump. So, the Legislature is not really deciding the future of income taxes, they’re deciding if they want to boost Republican turnout. 

The (Very Bad) Case for I-2111

All that 4-D chess didn’t come up in the hearing. 

Instead, more than 6,000 people and anti-tax lobbyists signed in to support the initiative, and about 650 signed in to oppose it. Supporters included Washington Young Republicans, Concerned Taxpayers of Washington, Washington Policy Center, the Washington Realtor Association, and some granola guy who delivered remote testimony during what appeared to be the middle of a hike.

Elizabeth Hovde from the right-wing think tank Washington Policy Center leaned into Let’s Go Washington’s disingenuous, populist branding in her testimony on Tuesday. She asked the Legislature to pass the initiative to “show respect for workers.” Instead, the state should continue to rely on sales tax, she argued. 

Of course, relying on the sales tax is actually much, much worse for the low-income people Hovde pretended to defend. According to the Institute of Taxation and Economic Policy (ITEP), the lowest-earning workers in Washington state pay almost 10 times more of their income—about 13%—in sales taxes than the wealthiest Washingtonians, who pay just 1.7%. Income taxes target the wealthy few instead. A more average worker in the middle bracket pays about 6.4% of their income in sales tax. 

Under the income tax in California, one of six states ITEP considered to have a non-regressive tax code in 2023, the lowest-earning workers actually get reimbursed at a rate of 1.8%, the middle-bracket workers pay 3.3%, and the highest earners get taxed at 8.8%. Minnesota, which ranks 50th on ITEP's Tax Inequality Index, the lowest tax bracket gets reimbursed at a rate of 2%, the middle bracket pays 4.6%, and those at the tippy-top pay 7.5%. Those low-wage and middle-bracket workers pay less in sales tax than they would in Washington in both cases. 

Others argued against taxation in general. Steve Gordon from Concerned Taxpayers of Washington said that the Legislature should pass I-2111 to support taxpayers who “don’t necessarily feel they are getting value in return for their taxes” because they see crime, homelessness, and rising cost of living. 

Nothing Matters

Opponents of the bill spent a lot of their time reminding commenters like Gordon how dumb they are. Pacifica Law Group partner Kai Smith, who represents public entities in matters of constitutional law, called the initiative “unnecessary.” The initiative would not change the current tax structure in Washington because an income tax is already illegal. It would not decrease taxes for anyone, it would not change state spending, and it would not help tackle the big issues Gordon mentioned.

Eric Pratt, a resident of the 27th Legislative District, acknowledged Smith and others’ argument in his testimony. He said that he still supports I-2111 as an extra line of defense to protect the income-tax-free state.

Not to be a Debbie Downer, but I don’t think it needs much more protection. Washington state considers income to be “property,” so income is subject to the State constitution’s uniformity clause from the 1930s. That means the state, counties, and cities cannot tax income progressively without a constitutional amendment, which requires a two-thirds majority vote in both chambers. 

Legislators kept quiet when Rich Smith asked about the possibility of passing an income tax following Washington State Supreme Court’s favorable ruling on the capital gains tax last year. Governor Jay Inslee said “it’s not going to happen.” 

Though Inslee is on his way out of office, the Legislature does not appear any hungrier to make big changes to the state’s regressive taxation scheme. Rep. Chipalo Street, vice chair of the House Finance Committee, told The Stranger in a phone interview that the Legislature couldn’t even manage to carry constitutional taxes over the finish line this year, so it doesn’t seem likely that someone would take on the task of whipping a two-thirds majority vote in both chambers to change the constitution and legalize income taxes. 

Even if every Democrat suddenly wanted to do right by people with lower incomes, they would still need to scoop up five House Republicans and one-fifth of Senate Republicans to secure a two-thirds majority. If they could do that, the same two-thirds majority could also overturn the initiative after two years if passed by the people and overturn it immediately if passed by the Legislature. 

What’s Gonna Happen?

Street told The Stranger he’s not sure how a vote on I-2111 would play out. He said all the Republicans would support it, but they don’t have the numbers by themselves. They might find support among tax-adverse Democrats, or maybe even some income tax supporters who see a bigger picture.

Street said he would “like to vote ‘no’” on I-2111, but he can see downsides to letting it go to the ballot. Washington voters have come out strong against income taxes multiple times, most recently in 2010 when 64% of voters rejected I-1098. The excitement to kill an imagined income tax could send out a bat signal to conservatives in a high-stakes election. Street seemed particularly concerned about the prospect of a second Trump, but in 2020, Biden won Washington by 784,961 votes, almost double the number of people who signed the petition for I-2111.

The conservative cat nip of the income tax ban would probably have more sway down-ballot. Anti-income tax voters would likely also support Let’s Go Washington’s measures to kill the capital gains tax, the long-term care insurance program, the carbon tax, and pass a new dangerous car chase policy and their parental bill of rights. A higher conservative turnout could also push the needle for Republican legislators in swing districts, or it could help Dave Reichert beat Bob Ferguson in what could be a tight race for Governor. 

But Street didn’t say if anyone in the Legislature was trying to convince their colleagues to pass the redundant measure for the sake of turnout. He said he’s listening to advocates outside the Legislature for guidance.

Invest In Washington Now and Fuse Washington, some of the leading advocacy groups against Let’s Go Washington, did not respond to comment. 

Chair of the Washington State Democrats Shasti Conrad told The Stranger in a text that Democrats are “certainly aware” that Republicans, led by chairman of the Washington State Republican Party Rep. Jim Walsh (R-Aberdeen), are using the initiatives to drum up higher turnout because they “continue to lose based on the candidates they put up.” So, Conrad said she trusts her legislative allies to “make the right play.”