I’ve written quite a bit about an income tax recently, prompting several readers to point out that such a measure would be unconstitutional, a standard rebuttal I routinely get from state lawmakers whenever I directly raise the issue with them.
The Washington Supreme Court has already ruled an income tax unconstitutional, and since neither house of the legislature is likely to coax the two-thirds majority necessary to put such a controversial amendment on the ballot, any debate about such a reform would be fruitless at best, and a distraction at worst. Or so the argument goes.
Well… not exactly.
Washington voters did overwhelmingly pass a graduated income tax via initiative in 1932, only to have it tossed out by the state Supreme Court the next year. It’s a complicated issue, but essentially the court defined income as property, thus requiring any such tax to adhere to the uniformity clause of the state constitution. Consistent with this ruling and other restrictions in Article 7 of the state constitution, the state can at most levy a flat one percent annual tax on income, with a household exemption of no greater than $15,000.
That said, all of the legal experts I’ve heard comment on the issue are of the opinion that the 1933 decision would likely be overturned if it were reargued today. Several other state supreme courts have since ruled that income is not property until it is converted to an asset, and in fact the case law guiding the court in 1933 has itself been overturned. As public finance attorney Hugh Spitzer explains:
[T]here is ample reason to believe that a modern income tax, established by the Legislature or by the voters, would now be upheld. The basic reason is that [Culliton v. Chase] was based on an earlier Washington case which the State Supreme Court clearly misread. More importantly, the earlier case was based on a line of United States Supreme Court cases that have subsequently been reversed. Our Court would likely take a “clean slate” approach to the income tax today.
So while yes, any income tax measure would surely be challenged under Culliton, Spitzer argues that there is a “reasonable likelihood” that this 1933 decision would be overturned.
That’s why I am strongly of the opinion that as both a strategic and pragmatic matter, the constitutional issue is little more than a red herring. In fact, it’s worse than that. It’s an excuse that Democratic leaders have been falling back on for decades to avoid the difficult and dangerous political challenge of embarking on real tax structure reform.
It is, I admit, possible that a high-earners or other form of income tax might ultimately require a constitutional amendment to enact into law, but that approach should only be taken as a last resort, and only after the people have already demonstrated popular support at the polls.
Any income tax measure — in fact, any substantive tax measure at all — will inevitably come before voters, either referred directly to the ballot by the legislature, or via citizen initiative or referendum. That is the indisputable reality of our current political climate. Thus the reasonable political course of action is to let voters have their say, and then the courts, ignoring the Culliton decision entirely.
If voters reject an income tax, then any prior effort to secure the two-thirds legislative majority necessary to put an amendment on the ballot would have been wasted. If voters approve an income tax, but the court rejects it, then the legislature has the popular mandate necessary to come back with a constitutional amendment. And if both voters and the courts approve an income tax measure, well, then it finally becomes law.
But since the people must ultimately have their say, what should be abundantly clear is that the 1933 decision can only become an obstacle to substantive tax reform if the legislature chooses to make it one.
So enough of this “an income tax is unconstitutional” bullshit. A) It’s probably not, and B) It doesn’t matter… at least not when it comes to strategizing how one might actually achieve an income tax, should that really be your objective.
Of course, if you oppose even the prospect of an informed public debate on an income tax, by all means, raise the constitutional issue. Just don’t expect me to treat your objection as anything other than what it really is.
income tax is unconstitutional and it does matter. its not bullshit.
in all your ramblings, i don’t see the logical argument. spell it out for me. i’m too stupid to read between the lines.
Hugh Spitzer rocks – he should run for a Supreme Court judge.
too stupid @1,
I thought I did spell it out, but I’ll try again.
Starting with a constitutional amendment is a losing strategy, and probably an intentionally losing strategy. Since we don’t know if the 1933 decision will be upheld or overturned, and since any income tax measure is going to ultimately come before voters, the best strategy is to go to voters first, then come back with a constitutional amendment if and only if an income tax passes voters, and is thrown out by the court.
Or to put it even more simply, Tim Eyman doesn’t worry about whether his measures are unconstitutional, so why should we?
@1
Who knows really? Remember we’re talking about a 76 year old decision where the precedent the court read in 1933 is not the same precedent that exsists today. It would be like refusing to pass anti-descrimination laws because of 70+ year old decisions that said private businesses had a right to descriminate as they please.
There’s no real harm in putting an income tax to the test. If the voters or the courts say “no” then so be it. Otherwise we can go to work on fixing the most regressive business and personal tax system in the country.
Republicans don’t care about the Constitution–why should the rest of us?
(w/apologies to Goldy @3. Thought and wrote before I read)
I like your reasoning, Goldy. Since we can’t get a declaratory judgement from the court in advance (no “case in controversy”, etc.), the only way to have standing to litigate the issue in court is to have a law or amendment passed, and then place the issue before the court.
But the politicians of all stripes are too wary of being painted as “tax and spend liberals” by the anti-tax wingnuts for them to pass an income tax in the legislature. Tax Reform is exactly the type of reform the initiative process was intended to support. We have to get out in front of the politicians on this one.
I’m not saying it would be easy. It would require a broad coalition of both Democrats and Independents (and maybe a few moderate conservatives) to make it happen. The tax would have to be carefully drafted to make it close to being revenue-neutral, simple to comply with (a postcard-sized tax return referencing numbers already calculated on your federal tax form), and replace existing state portions of sales taxes, B&O taxes, and property taxes. You might even have to have a “transition clause” which forbids those taxes being re-implemented within a reasonable period (five years or so?).
We would also need a very big war chest to counter the expected negative advertising from developers, etc. who don’t want to pay an income tax. That might be hard to raise.
But in the long run, it would be worth it.
Of course, PlatypussRex @ #1 believes that ALL income taxes are both illegal and immoral, as he has stated in other threads. He also doesn’t like public education. It figures.
@1 “spell it out for me. i’m too stupid to read between the lines.”
Okay, I will. I’ve been a lawyer for over 35 years and I can’t, off the top of my head, think of a single 1933 court decision, besides this one, that’s still used as precedent in this state. Caselaw of that vintage is ancient, found only in legal museums, covered with dust and used today only as grist for nostalgic or humorous articles in the Bar News. 1933 legal thinking is obsolete, dude.
@3 “Since we don’t know if the 1933 decision will be upheld or overturned”
Sure we do. You answered that question yourself, Goldy. I realize you’re not a lawyer, but I am, and from that vantage point, it’s a slam dunk.
I have an idea. Since platypus (and the rest of the caveman demographic) doesn’t like a graduated income tax, how about a graduated sales tax?
The sales tax rate would be based on your adjusted gross income on your federal 1040. To level annual income fluctuations, it would actually be the average of your last three filing years.
Having to present the sales clerk with your tax returns every time you make a purchase subject to sales tax obviously is cumbersome and inconvenient. To overcome that, each state resident will mail certified copies of his/her three most recent 1040s to the state department of revenue, which then will issue a color-coded “tax cards” to each state resident. The color of your “tax card” will determine the sales tax rate that retailers will charge you on purchases. Nonresidents would have the option of voluntarily applying for a “tax card” or paying a default tax rate, which of course will be the highest rate, in order to gouge tourists to the maximum practical extent.
goldy, why dont you and the rest of your tax lovers, VOLUNTEER to contribute more on your taxes?
@10..how about a flat rate tax on everyone? One vote, one tax rate.
and if you dont pay any taxes, then perhaps you shouldnt be allowed to vote.
@11,
Sounds good to me! But I suspect that Goldy et. al. aren’t too interested in that.
lebowski @11,
I’d accept a flat income tax with a very large exemption.
We already have a flat rate tax. It’s called the Sales Tax. Oh, and the B&O tax on business revenue (gross revenue, no deductions).
It’s not working so well.
@13…NO EXEMPTIONS.
When you start messing with something so simple and straightforward, you end with the messed up tax code that we have now.
EVERYONE needs to pay the same rate. NO EXCEPTIONS.
@14…we are talking about income tax, not sales tax.
Money is fluid, people lose it and gain it.
Unlike education. It stays for life.
Since higher educated people make more money, shouldn’t there be a tax on being educated.
After all, aren’t educated people lucky they had the chance to go to college when the majority of people in this country don’t have the same opportunity.
Since educated people earn more and own more stuff, shouldn’t they have to pay for being bigger users of the earths resources? Do rich educated people fly more contributing to global warming than poor uneducated people? Once again, the educated screwing over the stupid.
Tax the educated!
Let rujax live a life free of any tax burdens.
@11 “how about a flat rate tax on everyone?”
@15 “NO EXEMPTIONS.”
Go fuck yourself. Only wingnut asswipes like you think subsistence income should be taxed the same as money that buys yachts and country club membership. The civilized world thinks that’s bullshit.
Marvin,
I’ve addressed your concerns about our wager on the open thread we’ve been on.
Go read it and let me know.
GBS
lebowski et al.@ various: The amazing thing is some of these jerks call themselves “Christians.”
@17 STFU Goebbels Rabbit.
Take your jealousy and shove it up your hairy ass.
Of course, “no exemptions” means inheritances won’t be exempt, so the idea is not totally without merit. I’d support a flat-rate income tax that exempts all income up to poverty level, and beyond that level taxes inheritances as ordinary income with no basis step up.
@19
What does religion have to do with it.
I want people treated EQUALLY by the govt. And that means WE ALL pay the same percentage.
People who pay nothing or dont contribute should not be voting….especially when all they do is vote for politicians who give them stuff free of charge.
EVERYONE needs to put some skin in the game.
I can agree with inheritances being taxed.
@20 Kiss my http://farm4.static.flickr.com.....e42a_b.jpg
On a per capita basis, WA state ranks 17th in tax revenutes collected. ($8881 per person in 2007).
Wow.
nolaguy,
Not for state and local taxes. Washington state ranks 35 for state and local taxes.
We do not have the legislature that would ever do this. Ever. They aren’t that brave. They aren’t that imaginative. They will cut the usual things and then put forward more regressive taxes because they will imagine that’s what most people want. And then they will go home in March, having added to the state unemployment rate.
We’ll all have lots of time to campaign against the governor, against our legislators.
“I want people treated EQUALLY by the govt. And that means WE ALL pay the same percentage.”
“The law, in its majestic equality, forbids both the rich and the poor from sleeping under bridges.” Obviously, then, the same percentage of my yacht money and your rent money is fair, or at least it would be, if I owned a yacht.
Do we include the past year’s capital gains in the “everything?” I could go for that.
Tax rate tables aren’t terribly complicated. Deciding what “property” is, and what “income” is, those are complicated. “Tax simplification” is code for “raise taxes on the poor.”
Oh, Goldy, forgot to mention I like your thinking on this.
What about the parents paying for a child’s college?
Taxed?
What about if the inheritance is going to be used for college.
Double taxed?
Parents buying kid a new car?
Taxed?
Why don’t you just run this as an initiative, if you feel so strongly about it, Goldy? Take on Tim at his own game.
Goldy-
Correct.
platy @ 1
Progress marches on.
lebowski @ 22
You’re confusing equality with fairness. A flat tax rate is not fair.
Toby @ 31
Agreed. We are the change we’ve been waiting for.
Part of Eyman’s success has been he always comes back for another bite at the apple. A successful progressive tax reform campaign must be prepared to run multiple campaigns over many years.
According to the conservative Tax Foundation, Washington State ranks 8th highest in terms of income per capita, yet only ranks 35th in terms of state and local tax burden per capita. That’s quite a disparity.
The wealthy are not paying their fair share. Our tax structure is very regressive with its stong emphasis on sales taxes and no income tax. Forty three states have state income taxes.