Pasco City Council yesterday passed a resolution opposing a local income tax. Pasco is the 14th city in Washington to pass a local income tax ban joining Battle Ground, DuPont, Grand Coulee, Granger, Kennewick, Longview, Moses Lake, Richland, Spokane, Spokane Valley, Union Gap, West Richland and Yakima . Seven counties have also taken steps to prohibit a local income tax. These are Benton County, Chelan County, Douglas County, Franklin County, Grant County, Spokane County, and Yakima County.
Local governments are adopting these bans in response to a startling 2019 Court of Appeal decision that opened the door to a 1% flat local income tax. The state Supreme Court upheld that decision by not hearing the appeal.
The Senate held a public hearing last month on a bill that would allow local governments to impose a graduated income tax. From SB 5554:
“Subject to subsection (4) of this section, a county, town or city which meets the following conditions may levy a graduated personal or corporate net income tax…”
Although the Court of Appeals authorized a 1% flat local income tax, for SB 5554 to be fully implemented, a constitutional amendment would also be required to allow for a graduated income tax.
SB 5554 is the latest action by lawmakers trying to impose an income tax. Last year, the Legislature passed a capital gains tax (while refusing to block cities from imposing a local version) with proponents’ stated goal of using the courts to open the door to taxes statewide income. The capital gains income tax trial had oral argument last Friday (2/4) with a written decision expected in the coming weeks.
Not only have Washingtonians rejected 10 consecutive income tax ballot measures (including six proposed constitutional amendments), but last December WA’s Tax Structure Task Force received an update from his consultant on the community meetings and outreach he conducted showing that voters are still opposed to an income tax.
As more cities and counties act to ban a local income tax, we hope that this clear and consistent message opposing an income tax will finally be heard by state legislators and the governor.