Statement on Gov. Signing the Income Tax
Ryan Frost, WPC Director of Budget and Tax Policy:
Governor Ferguson signed Washington's first income tax today. He has enacted the largest tax increase in state history and a brand-new income tax, all within his first two years in office.
The governor framed the income tax as a tax for education and free school lunches. The bill he signed does neither. Almost all revenue goes to the general fund to backfill a deficit the legislature created by growing spending two to three times faster than the economy that funds it.
The governor laid out specific conditions for what the bill needed before he would sign it. The bill that reached his desk did not come close. He signed it anyway.
Washington does not have a revenue problem. State spending has grown roughly twice the rate of population and inflation over the past decade. The income tax is not a solution to that. It is a symptom of Washington’s spending disease.
Washington's spending trajectory guarantees that the $1 million threshold will not be held. At the rate Olympia spends, the governor or his successor will have no choice but to come back and lower it. I am not speculating about this; the math demands it.
To those who shrug today because this only affects millionaires: you will not get another chance to stop it. Once an income tax is in law, the question is not if it reaches you, but how fast.
Mark Harmsworth, WPC Director of Small Business Policy:
While marketed as targeting only the wealthiest 0.5%, this income tax hits business owners, pass-through entities, investors, and retirees with investment income. It opens the door to future expansion, and in fact there has already been public statements to that effect from Olympia leadership. Even the small offsets, like doubling the B&O small business credit, do little to ease the broader burden. This bill is a bunker buster to Washington's small business economy.
Additional Resources:
What Governor Ferguson said he needed from the income tax vs what he signed
Legislature refused to lock the new income tax as a tax on millionaires
WA State has a spending problem
Myth/Distortion of the "Rich won't pay their fair share" argument
Negative economic impact of WA's recent tax increases
History of income tax votes in WA
Washington State Constitution's definition of property includes income, prohibits graduated income tax
Top Ten Reasons a state income tax is a bad idea
