The debate over Initiative 1098, which seeks to create a state income tax on higher income residents, is part political and part legal.
The political question will be decided at the general election. That is, are there enough votes to pass an initiative that seeks to trade some tax cuts for the new income tax.
The legal question will take longer to resolve. Current case law in Washington is that income is a form of property and therefore is covered by two existing provisions in the state constitution. Those are that all property must be taxed uniformly and that regular levies on property can’t exceed 1 percent of value.
That has led to the conventional legal wisdom that an income tax requires amendments to the state constitution. But backer of I-1098, relying on an analysis by constitutional law scholar Hugh Spitzer, that a modern court will rule otherwise. Spitzer said the original cases were based on a misinterpretation of precedent and even those precedents have been altered by state and federal courts.
Not so says Phil Talmadge. The one-term justice who also served in the state Senate as a Democrat from West Seattle, argues in this letter that the current court would likely rule the same way as the 1930s and 1950s courts. He also questions whether state requirements for equal treatment and equal protection would be violated by a tax that exempts the majority of earners.
“The proponents of a graduated net income tax in Washington have vociferously argued that these older cases are no longer viable, because they allegedly rely on United States Supreme Court precedent that no longer finds that income-based taxes constitute taxes on property. This argument finds full flower in a 1993 law review article [by law professor Hugh Spitzer]. The essence of the argument advanced by Mr. Spitzer is found in the Context section of Initiative 1098.
However, since 1993, the Washington Supreme Court has been confronted with cases in which the continuing validity of the ‘income as property’ cases was questioned and has rejected the argument articulated in the Spitzer law review article.”
. . . Based upon this authority, it is likely the Washington Supreme Court would find the tax created by Initiative 1098 is a property, not an excise, tax.
Here is the Talmadge letter.