State Supreme Court overturns 70% of Washington Voters

In a pivotal 1933 case, Culliton v. Chase, the Washington State Supreme Court handed down a decision that overturned an income tax initiative that was supported by 70% of Washington voters.  This decision forever changed the fate of a graduated income tax in Washington State.

After the overwhelming passage of Initiative  69 in 1932, income tax proponents were celebrating their victory and state officials were taking steps to start collecting the recently passed graduated income tax.  As tax forms were being printed and prepared for delivery to the public, two Seattle businessmen brought forth a case that challenged the income tax on grounds of its lack of uniformity.  As written, Initiative 69 introduced an income tax that had higher rates for higher income earners.

 

William M. Culliton, an insurance broker, and Earl McHale, owner of a chain of gas stations, with the support of other Seattle business owners and prominent attorneys, filed their suit in Thurston County Superior Court. This challenge was based on the uniformity provisions of Article VII, Section 1 of the state’s constitution.  These provisions prohibit the state from levying different rates of taxation on the same property.

Washington had a long-standing precedent that sought to ensure that all forms of property were taxed uniformly.  This can be found in the territorial tax code and was later incorporated into the state’s constitution.  The drafters of Washington’s Constitution were vague in their definition of property.  This was intentional and came to be understood as any taxable property, both real and personal.

The vague nature of the constitutional definition of property was the grounds on which the graduated income tax portion of Initiative 69 was struck down.  The court found that income is property.  As such, a tax that introduced different tax rates on different incomes violated the uniformity requirements of the constitution. 

This decision set a precedent that has haunted income tax efforts ever since. In the years following Cullion v. Chase, the state supreme court has struck down 3 additional attempts at introducing an income tax in Washington.  Income tax proponents have yet to build proposals able to pass constitutional muster because of the court’s original decision.

The social and political atmosphere of the 1930s was ripe for change and reform.  A climate of that magnitude has yet to come over Washington since.  While there have been many attempts to introduce an income tax in Washington, this supreme court decision almost 80 years ago unfortunately may have laid to rest any opportunities for a graduated income tax in Washington State.

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