Grant County commissioners say no to county income taxes

The Grant County Board of Commissioners voted unanimously Tuesday to institute a ban on a county-assessed income tax for Grant County residents. In doing so, the county joins Moses Lake and several other Washington municipalities in opposition to such a tax.

“We felt like we want to be supportive of that position (against local income taxes),” said Grant County Commissioner for District 1 Danny Stone. “And, we also wanted to kind of declare to the legislature, because there’s another bill coming up this year too, to kind of steer local jurisdictions in that direction – to impose a local income tax, and we just wanted to preempt that by stating, ‘Well, we’re not going to be doing that to our citizens.’”

Jason Mercier, director of the Center for Government Reform, an office of the Washington Policy Center, said the history of income tax proposals at the state level in Washington has several jurisdictions passing measures similar to the one Grant County adopted this week and Moses Lake passed on Aug. 24 of last year. The first incident is a 2019 Washington Court of Appeals case entitled Kunath versus City of Seattle. In that case, Mercier said, the court effectively said cash is property and may be subject to taxation, though not to a graduated – that is, bracketed – income tax. Thus, the standing ruling allows for a 1% income tax at the local, state and county levels.

“People think, if they have an income tax, that’s unconstitutional (in Washington). That’s just not the case, just a graduated income tax (is prohibited) because our constitution limits property taxes to uniform and 1%,” Mercier said.

Another point of concern for those against income taxes is the submission of Washington Senate Bill 5554 which was filed on Dec. 17 by Sen. Bob Hasegawa, D-Seattle. That bill, if passed into law, would allow Washington municipalities to levy a graduated tax on personal or business income if it makes a corresponding reduction in the amounts collected in other tax revenue sources. Mercier said the bill is unlikely to pass given current support in the state legislature and if it does pass, it would likely face legal challenges similar to another recently passed tax.

“The other thing is, last session, the (Washington state) legislature passed the capital gains income tax. Again, arguably an unconstitutional tax,” Mercier said.

A decision on the capital gains tax law is likely to come at a summary judgment hearing set for Feb. 4 in Douglas County Superior Court. In that case, a Sept. 25, 2018, letter from the IRS indicates any capital gains tax is an income tax, by definition.

“Now we just wait to see if the court plays ball with (income tax supporters’) attempts or the court does what it’s done in the past and says, ‘No, you have to amend the (Washington) Constitution’,” Mercier said.

In an advisory election in November 2021, 61% of Washington voters said they wanted the 7% tax on capital gains above $250,000 set by SB 5096 earlier that year to be repealed.

Mercier said the Washington Policy Center, after examining the impact an income tax would have on the state’s economy, is not in favor of such a tax. He said the think tank believes such a move by Washington lawmakers would send potential employers looking for other locations to expand to.

A Dec. 9 presentation from the Washington Tax Structure Work Group indicated after various town halls throughout the state, the group found a lack of support from voters for income tax assessments, though with one caveat.

“Participants expressed support for the idea of the wealthiest Washingtonians paying more in taxes, but overall participants had more concerns than support for a wealth tax,” the report read. “Participants expressed concerns that a wealth tax would not be a stable tax base given how easily billionaires can leave the state.”

Stone said the county’s stance on the matter of an income tax is simply that it is not what Grant County residents want, so commissioners intend to stick by their constituents.

“I think it was a simple and healthy decision (to adopt the resolution) and a vote of confidence in the perspective our citizens have when they vote on these topics. When they see something coming out of Olympia, and they know there’s another bill coming this year, trying to push an income tax,” Stone said. “I think sometimes people go, ‘OK, what’s going to happen?’ and we just want to give confidence that that’s not a direction we’ll be going.”