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How much do you pay in taxes and which level of government imposes that tax burden? A new bipartisan bill introduced by the chair and ranking member of the Senate Ways & Means Committee would help answer that question by creating a searchable database of state and local taxes. Here is the intent section for SB 5158 - Concerning transparency in state and local taxation: “The intent of the legislature is to make state and local tax revenue as open, transparent, and publicly accessible as is f...
In 2019, nearly 80% of Spokane voters approved a city charter amendment requiring collective bargaining negotiations in the city to be open to public observation. Last week, however, the state Supreme Court, in response to a union lawsuit, ruled unanimously that this open government reform was unconstitutional. According to the justices “We hold that the legislature has preempted the field of collective bargaining through PECBA and PERC regulations. We find that to interpret PECBA and PERC as th...
Editor’s Note: This is the second of a two-part examination of state constitutions and how certain property is taxed in various states, continued from the September 1, 2022 edition of the Dayton Chronicle. Of those states that do define property in their constitution, none is as expansive as Washington. Here are further examples: • Massachusetts (Adopted 1916): “Full power and authority are hereby given and granted to the general court to impose and levy a tax on income in the manner herei...
Editor’s Note: This examination of state constitutions and how certain property is taxed in various states will appear in two parts. This is the first of two. Although most state constitutions mention how real, personal, tangible or intangible property should be taxed, the vast majority don’t define those terms. Of those that define property, Washington’s constitution has the broadest definition. This is why our state supreme court has repeatedly ruled that in order to impose a graduated incom...
In preparation for the coming state supreme court hearing on the capital gains income tax (oral arguments date not yet set), I wanted to see how many times lawmakers have proposed an income tax. We already know that voters have rejected six constitutional amendments to allow a graduated income tax. Since those votes, however, some lawmakers refuse to take no for an answer. In fact, since 1991 there have been more than 50 bills proposed to impose a broad-based income tax. This excludes the...
Capital gains income tax supporters set up surveillance system for I-1929 petition gatherers Proponents of the unconstitutional capital gains income tax are working overtime to prevent voters from weighing in. First, there was the game last year with the emergency clause to prevent a referendum. Now capital gains income tax supporters are gearing up to counter a potential I-1929 signature gathering campaign by setting up a surveillance system to report any ballot petition signing locations. As...
As expected, the I-1929 (capital gains tax repeal) campaign officially filed a legal challenge yesterday to the Attorney General's ballot title and summary for the proposed ballot measure. The AG's proposed language referred to the capital gains tax as an "excise tax" despite a court ruling unequivocally agreeing with the IRS and the rest of the country that a tax on capital gains is an income tax. From the I-1929 ballot title challenge complaint: "The Attorney General's proposed 'Ballot Title'...
When a court rules that a tax is “is declared unconstitutional and invalid and, therefore, is void and inoperable as a matter of law,” what happens next? One would think that means efforts by state officials to put the tax in place would be stopped. To see if this is the case for the now court declared unconstitutional capital gains income tax, I asked Washington’s Department of Revenue (DOR) what its current plans are. DOR essentially told me it’s proceeding the same way with the capital...
Two years. We have been living under two straight years of governance via emergency orders while bypassing the normal public legislative process. The Governor indicated yesterday the third straight year of his emergency orders is unlikely to end any time soon. This despite the fact other Democratic governors across the country are ending their emergency orders. When asked about ongoing requests from lawmakers to relinquish these emergency powers and support the same type of legislative...
OLYMPIA–If Washington was ever going to see a broad-based sales tax cut, this was the year. Now that the House and Senate have released their 2022 supplemental budget proposals, however, we know that the current makeup of the legislature is incapable of providing meaningful tax relief no matter the fiscal outlook or claims of concern about the tax burden on low to moderate-income Washingtonians. Neither the House nor Senate budgets include broad-based tax cuts. Instead they both massively i...
When finally given the chance to provide comment more than 10,000 Washingtonians signed in for the public hearings on HB 1772 and SB 5909 to reform the state’s emergency powers. Despite the huge public outcry, HB 1772 did not receive a committee vote. The Senate today did advance SB 5909 but rejected floor amendments that would have required affirmative legislative approval after a set period of time. By not requiring affirmative legislative approval to continue an emergency order, not much w...
OLYMPIA–Douglas County Superior Court heard oral arguments in the capital gains income tax case last Friday (2/4). The judge didn’t ask any questions until the very end of the hearing. Then he asked if the entire tax would be invalid if he found a constitutional problem or if a part of it could survive. He also asked if he needed to rule on all the constitutional challenges or if he agreed that it was unconstitutional under any of the challenges, he could stop his analysis on that. He ind...
Washington’s 2021-23 budget is balanced, there are billions in reserves, and state revenues have grown substantially over the past year. In response to this strong fiscal outlook, two major bipartisan tax relief bills have been filed in the Senate. They are SB 5932 (Reducing the state sales and use tax rate) and SB 5769 (Reforming the state tax system by providing tax relief to residents, employees, and employers). Adoption of either proposal would provide Washingtonians significant tax r...
Spokane County Commissioners unanimously adopted a resolution opposing a local income tax December 14. Spokane County is the third county to act, joining Franklin County and Yakima County as well as 11 Washington cities with local income-tax bans, including Battle Ground, DuPont, Granger, Kennewick, Longview, Moses Lake, Richland, Spokane, Spokane Valley, Union Gap and Yakima. From the Spokane County resolution: “Board of County Commissioners of Spokane County opposes the imposition of a l...
The opening briefs were filed yesterday in the capital gains income tax lawsuit. Included was a declaration I submitted to the court detailing a decade of my research on this topic with source emails from state revenue departments across the country, public records from WA’s DOR and a letter from the IRS directly confirming that a capital gains tax is an income tax. Here are some of the notable points the plaintiffs’ brief makes: • “Graduated taxes on personal income have been unconst...
I recently sent the legislature a public records request for the internal caucus discussions concerning the Governor’s emergency powers. I’ve received an initial batch of records with more to come in the coming weeks and months. Of note from the first installment of public records was this email exchange between Rep Rude, Rep. Walen and Rep. Springer (Note: All emails referenced available on request). On September 3, Rep. Rude sent an email to all House Democratic lawmakers with the subject lin...
Last month the Attorney General filed a response to the capital gains income tax lawsuit. The trial date for this case is scheduled for February 4, 2022. There were a couple of interesting statements from the Attorney General’s brief. Below is a quick compare and contrast of the statements from the Attorney General and the facts about capital gains income taxes. Attorney General: “Defendants deny the assertion that ESSB 5096 imposes an income tax, and deny that Plaintiffs’ understanding of in...
The legislature worked hard to keep voters from weighing in directly on the new capital gains income tax with a laughable emergency clause to prevent our right of referendum. Though some call non-binding tax advisory votes also laughable, voters will nonetheless get a chance to voice an opinion on the new capital gains income tax. The Seattle Times editorial page and Tax Foundation recently highlighted Advisory Vote 37 on whether to repeal the new capital gains income tax. From the Seattle...
On the same day the Governor ordered state employees (and others) to be vaccinated or face employment termination, state employee unions announced Inslee has agreed to re-open their 2021-23 contracts to negotiate pay raises. If government employees are going to receive pay raises, a sales tax cut should be on the table too. It has long been past the time for Washingtonians to receive a broad-based tax cut. Washington has historically ranked among the leaders across the country with strong tax...
On the same day the Governor ordered state employees (and others) to be vaccinated or face employment termination, state employee unions announced Inslee has agreed to re-open their 2021-23 contracts to negotiate pay raises. If government employees are going to receive pay raises, a sales tax cut should be on the table too. It has long been past the time for Washingtonians to receive a broad-based tax cut. Washington has historically ranked among the leaders across the country with strong tax re...
While we wait for the capital gains income tax litigation to work its way through the courts, the University of Washington’s Law School has posted an interesting video: “Three-minute Legal Tips: Capital Gains Tax.” The video is a short interview with Professor Scott Schumacher, Director, Graduate Program in Taxation. Of particular note were these comments from Professor Schumacher: “A capital gains tax is just a tax on certain type of income…To the extent this is an income tax, and I think it is...
We have our first Title Only bill of the session–HB 1564: Concerning transportation spending. It was introduced on March 28 and has already been scheduled for a public hearing on April 1 (no fooling). This essentially blank bill is sponsored by seven Democratic members of the House Transportation Committee. Based on the limited text, it appears this bill will eventually transform into a major transportation tax increase proposal. Don’t worry though, the sponsors promise the real text will be...
OLYMPIA–During last Saturday’s Senate floor debate before the 25-24 passage of the income tax on capital gains (SB 5096), there was discussion about allowing voters to run a referendum on the new proposed tax. An amendment by Sen. Hobbs was adopted that directly removed the emergency clause and language from the intent section claiming the bill was necessary for the support of state government. Another amendment by Sen. Brown would have placed the measure directly on the ballot, but Sen. Rob...
It is painfully clear that the majority party legislative leadership in the House and Senate have no intention of debating if checks and balances are needed on the Governor’s emergency powers. All of the emergency powers reform bills and economic reopening metric proposals died yesterday without ever receiving a floor debate. This is occurring while the Governor says he currently has no Phase 3 or Phase 4 plans and one region was initially wrongly held behind from Phase 2 due to data errors. T...
With each passing day of session bringing a new tax proposal, I have to go back and review the state’s revenue forecast and budget balance sheet to make sure I’m not missing something. Yep, looks like revenue is still projected to increase by 7% for 2021-23 (with monthly revenue collections already exceeding the November estimates) and the budget is balanced. Despite this, we’ve now seen tax proposals for a 9% income tax on capital gains, a statewide soda tax (despite being highly regre...
