Opinion: Will Washington voters say no?

Ten times since 1934, Washington voters have said no to any kind of income taxes, including those targeting the wealthiest among us.


Advocates are facing a daunting history of 10 straight rejections at the ballot box for income taxes

David Boze
Washington Policy Center

Ten times since 1934, Washington voters have said no to any kind of income taxes, including those targeting the wealthiest among us.  Will it soon be 11? 

David Boze, Washington Policy Center
David Boze, Washington Policy Center

The effort to repeal the newly-instituted income tax on capital gains advanced today with the certification of more than enough signatures to make it to the ballot. The first stop though, is the state legislature where the legislative majority is expected to do nothing. That action (or inaction) will send it to the voters in the fall.  

Advocates are facing a daunting history of 10 straight rejections at the ballot box for income taxes. 

But this time, they have an advantage.

Despite the IRS confirming a capital gains tax is an income tax and despite every other state in the union and several other countries confirming they treat capital gains taxes as income taxes because … well, it’s the taxing of a form of income, the Washington State Supreme Court legitimized this political version of “Freaky Friday” and allowed Washington’s income tax on capital gains to become an “excise tax on capital gains.” This is an advantage unprecedented in the history of Washington’s income tax votes. Instead of being faced with truth in labeling, advocates will claim no “income tax” is on the line. I can imagine media sources “fact checking” opponents who call it an “income tax” and more.

Washington voters earned the right to decide — they also deserve an honest debate, 

David Boze is the communications director at the Washington Policy Center.


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2 Comments

  1. edward

    Here’s the problem with letting the State tax “only” the rich. The State has demonstrated an unsatiable appetite for taxing more, more,& more. Soon the threshold for “only” the rich is removed, and it’s a tax on all of us. – Just say no.

    Reply
  2. Pete

    More than a dozen years ago, I escaped from California due to a retroactive income tax increase (passed late in the year and made retroactive to the first of the year) — but that tax did not apply to me at my income level. However, it is implicit that if a tax is created, it is usually a matter of time that the tax will spread to “middle income” levels, because that is where the majority of tax will be raised. It’s not that “the rich” (whatever that may be) don’t pay enough in taxes, the real problem is that there is not enough “rich” to generate any truly significant amount of tax revenue. The “middle class” is where the tax revenue can be found. So politicians start a (new) tax program at the highest income levels, then gradually extend it to ever lower income levels until the middle class is generating the bulk of the revenue. (Look up the history of the Federal Income Tax.)

    Unfortunately, these taxing methods (1) drive the “rich” to invest in tax exempt bonds and make other tax-based investments that may not be particularly economically efficient. (2) Higher taxes “on the rich” tends to reduce the total revenue, and lower the economic efficiency of the total economy. (Study the actual outcome of the “Trump Tax Cuts For The Rich” and you will find that the economic activity (after a year or two) generated “record” tax revenues and also significantly increased overall economic activity creating jobs and wealth for all of us.) The economy is a dynamic situation so the usual revenue estimates of tax increases (that presume the economy is static) never develop anywhere near the revenue as assumed and tax cuts never “cost” as much in revenue as “estimated.”

    Indeed, California raised taxes — and Elon Musk moved to Texas. Washington has raised taxes though it’s so-called “excise” tax and some of the Billionaires that lived here have moved away — with more to follow. Since the “excise tax” will not generate revenues expected, it will then be extended to cover the middle class and retirees that have modest investment accounts. Even worse, this tax is on UNREALIZED gains, so a “good” year in the stock market can generate taxes, on gains that my well be wiped out in the next “down” year in the market. Keep in mind that investments are generally made with funds that have already been taxed as it was generated to then be placed into investment accounts. (An exception is 401k, IRA, and similar accounts — but those get taxed as regular income when withdrawn.)

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