Why a local income tax is illegal in Washington state
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Key Findings:
- According to the Washington State Supreme Court (1951): “It is no longer subject to question in this court that income is property.”
- For eight decades the Washington State Supreme Court has ruled that income is property and that a graduated income tax is unconstitutional in Washington state.
- Local governments only have taxing authority by grant of legislative approval.
- State law prohibits a local government from imposing a tax on net income.
- These facts demonstrate that without a constitutional amendment and express legislative approval, a local income tax is illegal in our state.
- The voters have been provided multiple opportunities to overturn the numerous rulings by the state Supreme Court declaring a graduated income tax unconstitutional. Each time, however, the voters have overwhelmingly rejected those constitutional amendments to allow a graduated income tax.
Introduction
Recently members of the Seattle City Council, in defiance of state law, imposed the first-ever local income tax in Washington state. A group of citizens is suing the city on the grounds that city councilmembers are seeking to violate their constitutional rights. This paper explains why local income taxes are illegal in Washington, based on past court rulings, state law, and the constitution.
For eight decades the Washington State Supreme Court has ruled that income is property and that a graduated income tax is unconstitutional in Washington state. In addition, a legal principle in Washington says that local governments only have taxing authority by grant of legislative approval. Local officials cannot invent their own taxing authority out of thin air. Finally, state law prohibits a local government from imposing a tax on net income. These three facts demonstrate that without a constitutional amendment and express legislative approval, a local income tax is illegal in our state.
Download the full Policy Note.