WPC board member Matt McIlwain has a new op-ed in Geekwire that lays out a strong case for repealing Washington's new income tax, but also brings forward a consequence of the tax that few have thought about but is likely to be extremely consequential. More on that point in a minute.
First, McIlwain sounds the alarm on pensions, warning teachers, firefighters and other pensioners that "the only reason to make their [pension] income subject to the tax is to require them to pay when it is lowered to apply to them." Then he points out that when the tax was passed, they voted to pass the tax and "a second time to ensure they could expand it to everyone."
Anyone paying attention to the income tax story should recognize that the promises made to keep it to "millionaires" (and businesses that might look like millionaires on paper), are, to borrow a phrase, "pie-crust promises - easily made, easily broken."
McIllwain points to the meteoric rise in state spending, the warnings from governors Gregoire and Locke that Washington has a spending problem, and the real world exodus of companies and individuals of wealth from the state of Washington.
It's as a good a compact case against the income tax that I've seen (and I highly recommend you read it and share it) and its relatable to just about anyone across the political spectrum.
But the part that stood out to me was this:
Second, avoiding the tax effectively means cutting all ties to Washington. Under the new law, it appears taxpayers can only shed their Washington domicile by spending 30 days or fewer in the state a year and selling their home....
This rule is also an existential threat for the state’s largest nonprofits, as financial advisors are already telling clients the “gold standard” for anyone trying to sever ties is to stop philanthropic giving in Washington entirely.
Think about that. For many non-profits (medical facilities, zoos, museums, playhouses, symphonies, universities, etc), they will suddenly be directly hit with the unintended consequences of this poor policy should voters choose to keep and should the court ignore 100 years of precedent and the plain language of the state constitution that prohibits graduated income taxes.
If this tax stands, the wealthy people who choose to build their dreams and opportunities elsewhere will have to start giving elsewhere -- building ties within their new communities and avoiding Washington's desperate rules to link them to the tax that drives them out. This will create major challenges for nonprofits throughout the state because when these benefactors disappear, even with a course correction, it would take Washington some time before it regains its reputation as a friendly place to do business.
Read the piece on Geekwire and let me know in the comments the line or two that struck you the most.
