21 local governments have acted to ban an income tax

Monday, February 07, 2022
21 local governments have acted to ban an income tax

By Jason Mercier
Feb 8, 2022

The Pasco City Council yesterday adopted a resolution opposing a local income tax. Pasco is the 14th Washington city to adopt 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 acted to ban a local income tax. They are Benton County, Chelan County, Douglas County, Franklin County, Grant County, Spokane County and Yakima County.

Local governments are passing these bans in response to a surprising 2019 Court of Appeals ruling that opened the door to a flat 1% local income tax. The state Supreme Court let this ruling stand by not hearing the appeal.

The Senate held a public hearing last month on a bill that would authorize local governments to impose a graduated income tax. From SB 5554:

“Subject to subsection (4) of this section, a county, city, or town that meets the following requirements may levy a graduated tax on personal or business net income…”

Though the Court of Appeals authorized a flat 1% local income tax, for SB 5554 to be fully implemented a constitutional amendment would also be needed to allow a graduated income tax.

SB 5554 is the latest action by lawmakers trying to impose an income tax. Last year the legislature adopted a capital gains income tax (while refusing to pre-empt cities from imposing a local version) with the stated goal from supporters of using the courts to open the door to income taxes across the state. The capital gains income tax lawsuit had oral court arguments last Friday (2/4) with a written ruling expected in the next few weeks.

Not only have Washingtonians rejected 10 straight income tax ballot measures (including six proposed constitutional amendments), but last December the WA Tax Structure Work Group received an update from its consultant on the community meetings and outreach it conducted showing that voters are still opposed to an income tax.

As more cities and counties act to ban a local income tax, hopefully this clear and consistent message opposing an income tax will finally be heard by state lawmakers and the Governor.