Washington State Jumps on Tax Increase Bandwagon

Published May 24, 2010

The Washington State Legislature has voted to follow lawmakers in other states trying to tax their way out of the economic recession, and a proposed initiative would raise a billion dollars in additional taxes.

On a party-line vote, Democratic lawmakers in Washington raised nearly $800 million in taxes to close the state’s budget deficit. Pro-tax legislators noted lawmakers in other states were doing the same thing.

These tax increases, passed in April, were facilitated by temporarily repealing the two-thirds vote requirement for tax increases adopted by voters in 2007. Voters previously adopted this same provision in 1993 and 1998.

Higher Tobacco, Business Taxes
The tax package includes rate increases on tobacco products, a three-year increase in business taxes, extension of the state’s sales tax to candy, gum, and bottled water, and creation of a soda pop tax.

As she signed the tax packages, Gov. Chris Gregoire (D) said, “I believe in the people of the state of Washington. I’m asking them to stand up and do what’s right on a temporary basis to see us through this worst time.”

No Time for Study
To the dismay of open-government advocates, the 112-page tax proposal was voted on the first day the details were made publicly available.

“Regardless of how each lawmaker planned to vote, it is very disappointing they don’t believe they need at least a day to study the details of a massive tax increase, and they don’t think their constituents deserve this commonsense courtesy either,” said Dann Mead Smith, president of the Washington Policy Center.

The stealth nature of the Legislature’s activity also drew the ire of capitol reporters.

“The public was a loser, at least the public that wanted to weigh in on the final tax package that appeared on the last day of the special session,” wrote Jim Camden, reporter for the Spokesman Review.

“After spending much of the previous 28 days in backroom discussions about what mix of tax hikes was acceptable to a bare minimum in the House and Senate, Democratic tax leaders rather imperiously released a take it or leave it plan in a ‘conference’ committee and insisted there was really no need to hold public hearings because everything had been discussed in one form or another at some point or another. No real reason to wait a full day before voting; not like anyone really needs to read it, let alone study it line by line,” he continued.

Looming Deficit, Tax Hikes
Despite the nearly $800 million tax increase, a multibillion-dollar budget deficit is already projected for the state’s next budget, and new tax increases are already being discussed, including a proposal for a voter initiative drive to approve a graduated income tax of over a billion dollars per year. The state now has no personal or corporate income tax.

Gregoire campaigned on opposition to an income tax. After the announcement that liberal groups are hoping to get an income tax initiative on the November ballot, Gregoire told reporters she would sign the initiative petition “because I really do think it’s time for us to have a good discussion in the state of Washington about how are we going to fund education. Everybody says we need more money and we should spend more money on education. How are we going to do that?

 “I suspect in the end that I am going to support it because candidly I have to say I don’t see another avenue to provide the kind of funding for education that we need,” Gregoire added.

Legal Challenge
Proponents of the billion dollar income tax initiative are collecting signatures to place it on the November ballot. If adopted by voters, the initiative likely would face a legal challenge because the state Supreme Court has already ruled a graduated income tax is unconstitutional in Washington.

“If the governor supports an income tax, she should have said so in the first place instead of waiting for an initiative to be filed. The public has a right to know the governor’s position on such an important issue, especially since income tax backers are seeking to reverse established court decisions to put the tax in place,” said Paul Guppy, vice president of research for the Washington Policy Center.

Jason Mercier ([email protected]) is director of the Center for Government Reform at the Washington Policy Center.