This November, Washington voters will once again have a say on establishing a state income tax. Supporters have made promises about who will pay it, how the money will be used, and what it will mean for Washington’s economy. But those promises don’t pass muster when measured against the law, lawmakers’ own words and trends emerging across the state. With weeks to go before Election Day, it’s time to separate myths from facts surrounding Washington’s new income tax.
Myth 1: This tax will only apply to the highest earners.
You may have seen ads recently claiming this tax will only apply to the wealthiest residents, but lawmakers say otherwise. State Rep. Cindy Ryu, for example, recently admitted she wants to see the tax expanded to household incomes as low as $250,000, meaning two earners making $125,000 each could be subject to it. Lawmakers repeatedly rejected efforts to lock the threshold into law when passing SB 6346, which established the tax, ensuring there is nothing stopping Rep. Ryu and others like her from forcing their tax agenda on Washingtonians.
The threshold is not the only concern. For nearly eight decades, state law kept public employees’ retirement checks off-limits to state taxes. SB 6346 ended those protections with a single sentence added to 11 pension laws, exposing teachers, firefighters, police officers and other public workers to the tax, while also failing to shield Social Security benefits. That follows efforts earlier this year to raid $4 billion from firefighters and police pension funds. These are not people making $1 million. If the tax is truly meant only for the highest earners, why leave the door open to taxing retirement benefits of people who dedicated their lives to public service? It’s a question worth asking the public-sector union bosses who have spent $10.4 million defending a tax that exposes their own members’ retirement savings.
Then there is the math. Even at the state’s projection of roughly $3.5 billion annually, the tax will not cover lawmakers’ spending commitments. When the money falls short, Olympia can either spend less or find more taxpayers. With lawmakers already discussing expanding the tax, voters are justified in asking whether that is a risk they are willing to take.
Myth 2: The income tax will help fund critical services like education and healthcare.
Not one dollar is dedicated to K-12 education or healthcare. Instead, 95% of the revenue goes into the general fund, where lawmakers can spend it as they choose. This is not a dedicated investment in classrooms, hospitals or critical services. Having written legislative budgets myself, I know that if funds aren’t specifically earmarked, they are not committed.
That distinction matters. Washington’s problem is not a lack of revenue. Since 2010, the state budget has grown from $26 billion to more than $80 billion, about $26 billion more than if spending had kept pace with population growth and inflation alone. Yet, over the last decade, Washington’s national education ranking has fallen from 20th to 31st, and homelessness has increased from roughly 20,000 to 30,000 individuals, even as spending grew roughly sixfold. More spending has not produced better results. Before asking taxpayers for billions more, Olympia should be accountable for the money it already has.
I share concerns about ensuring Washington has strong schools, better healthcare and social services that work, which is why voters should consider this tax’s impact on charitable organizations. The bill, as written, caps charitable deductions and considers giving history when determining residency. As a result, advisers are urging departing donors to stop giving in Washington altogether, jeopardizing shelters, hospitals and community health programs.
Myth 3: Washington’s economy can easily absorb a new income tax.
Washington already ranks 45th in tax competitiveness. The new tax applies to income from pass-through businesses such as S-corporations, LLCs and partnerships, while our largest publicly traded corporations are exempt. Those most exposed are small and midsize businesses, which employ roughly half of Washington’s workers. Nearly a quarter of Washington employers are now considering leaving the state, roughly triple the share from a year earlier. That should be a warning, not an invitation to impose higher taxes on job-creators who empower our economy.
For nearly a century, Washington voters have rejected a state income tax at the ballot box. This time, lawmakers did not ask. Voting “yes” on Initiative 645 puts that power back in voters’ hands and demands Olympia do better.
Editor’s note: Below, watch The Seattle Times editorial board interview with representatives of groups for and against I-645, which would repeal the so-called “millionaires tax.”
