In Washington, however, an excise tax is constitutional and an income tax is not. So it’s not surprising that legislative Democrats who voted for the law and Gov. Jay Inslee, who signed it, argue this is an excise tax.
Unfortunately for people who agree with them, Douglas County Superior Court Judge Brian Huber, who heard a legal challenge to the law, said last month the tax is set up like an income tax, being collected once a year, rather than an excise tax, which is collected at the time of a transaction like a sales tax.
In the lawsuit filed last week in Thurston County Superior Court and distributed courtesy of the Washington Policy Center, the I-1929 campaign argued voters should be given a ballot description stating, “This measure would repeal a 7 percent tax on individuals with annual capital gains income above $250,000, subject to certain credits, deductions, and exemptions.”
Having “income” anywhere close to “tax” in an initiative is often the kiss of death in Washington politics, as both sides of this dispute know.
But under state law, the attorney general’s office writes the proposed description and summary. It proposed, “This measure would repeal a 7 percent excise tax on annual capital-gains above $250,000 by individuals from the sale/exchange of stocks and certain other capital assets (the tax exempts real estate and retirement accounts).”
State law has a limit of 30 words for the ballot descriptions, the I-1929 campaign notes in its lawsuit, and the attorney general’s proposal is over that, while theirs is under. Beyond that, it argues, capital gains shouldn’t be hyphenated even in an effort to combine two words into one, and putting a slash between sale and exchange makes no sense.
A main argument is that Huber ruled it was an income tax, and although the state has appealed that ruling, it should be called an income tax unless a higher court says otherwise.
If the Supreme Court agrees with Huber, however, the initiative is pretty much moot.
By the numbers
The Seattle Chamber of Commerce recently released results of a March survey of city voters, which shows that people are more reluctant to venture downtown, particularly at night, and want something done about the homelessness problem.
Three out of four said the city was on the wrong track, and four of five said their quality of life is worse than four years ago.
While it wasn’t surprising that 59 percent said their taxes were too high and that 71 percent said they didn’t trust the city to spend their tax dollars responsibly, it was somewhat contradictory that 61 percent said the city needs more money to address homelessness.
But then two-thirds thought the city should solve its budget problems by prioritizing basics, supporting the most vulnerable residents and reducing noncritical spending.
Of the 700 people surveyed, 60 percent self-identified as Democrats and 20 percent as independents. Republicans, at 12 percent, beat out Socialists at 7 percent. Two-thirds of the entire survey said they’ve considered moving out of Seattle, although for Republicans, that number was 100 percent.
