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Washington lawmakers hold hearing on voter initiative that would ban state, local income tax

Rep. Jim Walsh (R-Aberdeen) offered testimony at a joint committee hearing on I-2111, a measure to prohibit any new income taxes in Washington, Tuesday, Feb. 27, 2024. Walsh is the chair of the Washington State Republican Party, as well as the official sponsor of the initiatives being heard in the Legislature this week.

Rep. Jim Walsh (R-Aberdeen) offered testimony at a joint committee hearing on I-2111, a measure to prohibit any new income taxes in Washington, Tuesday, Feb. 27, 2024. Walsh is the chair of the Washington State Republican Party, as well as the official sponsor of the initiatives being heard in the Legislature this week.

Jeanie Lindsay / NW News Network

The first of three voter initiatives that will get hearings in the Washington Legislature took center stage Tuesday. A joint committee of Senate and House lawmakers held a public hearing on Initiative 2111, which would prohibit the state or local governments from creating an income tax.

Nearly two dozen people offered public testimony on the measure. A small crowd attended the one-hour hearing, but several people who signed up to testify online didn’t show up.

Overall, proponents of the measure said they don’t want more taxes, while opponents of the initiative said it would be pointless to enact. Washington does not currently have a personal income tax (even though it used to), and a state analysis has shown I-2111 would not affect existing taxes or programs.

So lawmakers started the meeting Tuesday by asking questions about what impact the initiative could have. The initiative as written would ban income taxes from being created at the state and local levels, under the federal government’s definition of “income.”

Kai Smith, a lawyer at Pacifica Law Group, told lawmakers he worries voters might think the initiative would change something now.

“This measure, if enacted, would have no impact on our tax code or taxpayers today,” he said.

But supporters of I-2111 say the measure is an opportunity to send a message to the Legislature that income taxes aren’t welcome. They say it would also act as a barrier to any possible pitches to create income taxes in the future, as Democrats consider ways to make the state’s tax structure more equitable.

“The people who have signed up in support of this initiative…have sent a clear message: Don’t tax our income,” said Amanda McKinney, a Yakima County Commissioner.

Even without the initiative, a statewide personal income tax likely wouldn’t be able to address the inequity issue under current law anyway – an income tax in Washington would be subject to uniformity rules that disallow higher rates for wealthier people. That was a key issue weighed by the Washington Supreme Court after the state imposed the new capital gains tax, which is a 7% tax on profits from the sale of assets, like stocks and bonds, that exceed $250,000.

Democrats, who hold a majority in the Legislature, have said the initiative hearings are a chance for them to learn more about the effects of the measures – and whether there is enough support to enact them as-is, or propose an alternative for voters to consider alongside the original measures in November.

Lawmakers will hold public hearings on Wednesday morning for two more initiatives, to roll back limits on police car chases and outline parents’ rights to oversee their children’s school records. The committees hearing the three proposals this week are scheduled to take action on them Friday.

Three more initiatives – to repeal key parts of the state’s Climate Commitment Act, repeal the capital gains tax and make the WA Cares long-term health care payroll tax optional – will not get hearings and are heading directly to voters’ ballots this fall.

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