By TED O’NEIL
THE CENTER SQUARE CONTRIBUTOR
(The Center Square) — Grant County, located southeast of Seattle, this week became the fourth county in Washington state to ban income taxes.
It joins Yakima, Spokane and Franklin counties and 12 cities to ban the levying of income taxes on businesses and workers.
Other municipalities taking the same position in the past year include DuPont, Kennewick, Battle Ground, Granger, Longview, Moses Lake, Richland, West Richland, Spokane, Spokane Valley, Union Gap and Yakima.
“Board of Commissioners hereby declares that imposition of a local income tax on the businesses and residents of unincorporated Grant County is prohibited,” read the commissioners’ resolution. “Such a tax would be in direct conflict with the high value the county places on promoting economic development through the attraction and expansion of financially healthy, family wage paying employers. Small businesses are the backbone of our local, regional, state and national economy, and it is
imperative the county not put unnecessary hurdles in the way of their success.”
All but one of the cities and counties have adopted the measure on a vote by elected officials. Voters in the city of Yakima last year approved a charter amendment banning income taxes by a margin of 78-22. In addition, 61% of voters recommended that legislators repeal a new capital gains tax.
The Grant County resolution, which passed unanimously, specifically prohibits “a local income tax on wages, salaries, investments, the sale of goods or any other income source.”
The vote comes amid a 60-day legislative session in which a bill allowing local governments to impose a graduated income tax could be considered.
“I believe it’s important for local government to clarify to those politicians who seem to think increasing taxes is always a good thing, that our citizens are not on board,” Board Chair Danny Stone told Jason Mercier, director of the Center for Government Reform at the Washington Policy Center. “It appears many of those politicians are bent on imposing an income tax on Washington’s citizens, even though we’ve said ‘no’ to 10 straight income tax proposals. We are happy to join with several other Washington counties and cities in saying that, even though a court of appeals suggested in 2019 that a local income tax in Washington may be possible, we are committed to not doing that to our county’s citizens.”
At play here are two court cases.
The state Supreme Court in April 2020 struck down an attempt by Seattle to impose an income tax on wealthy households. The city council there in 2017 approved a 2.25% tax on individuals earning more than $250,000 and couples earning more than $500,000.
Estimates showed the tax would bring in about $40 million a year for the city.
Both the King County Superior Court and the State Court of Appeals ruled against the tax, and the Supreme Court declined the city’s request for a review. The main reason for the tax being overturned is that income is considered property and the state constitution says property must be taxed evenly.
The Supreme Court did, however, let stand an appellate court decision last year that overturned a 1984 law banning taxes on net income.
That move opened the door for cities to impose a 1% flat tax on net income.
Legislators last year also approved a new law, to begin this year, that would impose a 7% tax on long-term capital gains in excess of $250,000 and is estimated to net the state $500 million annually. A legal challenge to the law is working its way through the courts.