(The Center Square) – Opposition to income taxes continues to spread in Washington state.
Yakima County recently became the first county in the state to formally ban the levying of income taxes on businesses and workers.
It joins seven cities that have taken the same measure this year. Kennewick, Battle Ground, Granger, Moses Lake Spokane, Spokane Valley and Union Gap have all done the same. The DuPont City Council is expected to vote to ban income taxes at its Tuesday night meeting and residents in the city of Yakima will vote on a charter amendment this November that would ban a local income tax.
“Such a tax would be in direct conflict with the high value the county places on promoting economic development through the attraction and expansion of financially healthy, family-wage paying employers,” read the county commission’s resolution. “Small businesses are the backbone of our local, regional, state and national economy and it is imperative the county not put unnecessary hurdles in the way of their success. As such, the Board of Yakima County Commissioners prohibits the imposition of a local income tax in the event a local income tax is determined legal by the Washington Supreme Court or the Washington State Legislature.”
The state Supreme Court in April, 2020 struck down an attempt by Seattle to impose an income tax on wealthy households. The city council there in 2017 approved a 2.25% tax on individuals earning more than $250,000 and couples earning more than $500,000.
Estimates showed the tax would bring in about $40 million a year for the city.
Both the King County Superior Court and the State Court of Appeals ruled against the tax and the Supreme Court declined the city’s request for a review. The primary reason the courts overturned the tax was that income is considered property and the state constitution says property must be taxed evenly.
However, the Supreme Court let stand an appellate court decision last year that overturned a 1984 law banning taxes on net income.
That move opened the door for cities to impose a 1% flat tax on net income.
Douglas County Superior Court Judge Brian Huber on Friday ruled that a lawsuit challenging the state’s new capital gains tax can move forward.
Legislators earlier this year approved the law, to begin in 2022, that would impose a 7 percent tax on long-term capital gains above $250,000 and is estimated to net the state $500 million annually. The outcome is expected to end up before the Supreme Court.
Lawmakers at the same time also did not preempt cities from imposing their own capital gains taxes.