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Former Justice Talmadge says I-1098 would likely be found unconstitutional

Post by Peter Callaghan / The News Tribune on Aug. 26, 2010 at 9:13 am with 5 Comments »
August 26, 2010 9:13 am

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.

Leave a comment Comments → 5
  1. EatonvilleTaxPayer says:

    A state income tax on ONLY the highest income earners would easily be found unconstitutional. All people must be taxed equally.

    You can bet that IF this passes, which I don’t foresee, they will immediately decide it us unconstitutional and start taxing everyone equally.

    So, if you plan on voting for this because you don’t think it would cost you money, just the rich folks, then think again….you might just be cutting your own throat with a vote for this.

    VOTE NO ON STATE INCOME TAX.

  2. majorpayne says:

    As somebody said a few years ago, “Bring ‘em on!”

    Since I-1098’s income tax would replace 4% to 5% of every household’s property tax and the entire B&O tax on 80% of the state’s businesses, it stands to reason that if everybody pays a 9% flat income tax, the state could eliminate all of the rest of our taxes. With no sales tax, our retail businesses would have an enormous advantage over those in other states and Canada. With no property tax, homeowners could quit worrying whether their properties are taxed “fairly” with respect to their neighbors, and 39 counties could eliminate their tax assessors. How about that for a spending cut?

    Every taxpayer affected would be able to deduct 100% of state income taxes when filing annual tax returns and get money back from the federal government that might help the Secretary of Defense in drawing down our bloated defense budget.

    To get the ball rolling, all we need to do is vote for I-1098 and for smart legislators who can do the math.

  3. JeffTacoma says:

    Talmage has turned into a reliable Rebublican political hack, sort of retired, sort of senile, sort of stupid fool willing to say anything to see his name in print. Who cares.

  4. EatonvilleTaxPayer says:

    Careful! ONLY the state’s portion of property taxes would be reduced. That’s just pennies! They sure want to make this sound good.

    What portion of B&O tax payers/businesses will be paying less remains to be seen, but how long before they change that and start taxing everyone once again.

    I-1098 is a trap to get stupid people to vote for a state income tax. Something voters to date have continuously voted down!

    VOTING NO ON STATE INCOME TAX.

    If they can’t tighten the belt and spend the money they have now wisely, what makes anyone think they will do any different with funds from a state income tax. Ridiculous!

  5. majorpayne says:

    Why don’t you try being “careful” to read what I-1098 says and your own tax bill together, EatonvilleTaxPayer?

    Based on my latest actual property tax bill, 20% off my school tax would be $208. That’s not “pennies,” and the richest who would pay income tax under I-1098 would get the same percentage off their tax bills, which might be 5 or 10 times bigger.

    “What portion of B&O tax businesses will be paying less” is beside the point. ALL businesses who now pay less than $4,800 in B&O tax would pay nothing under I-1098. What’s so hard for “stupid people” to understand?

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