Income tax initiative passes in Washington State!

Believe it or not, Washington voters once approved a people’s initiative to introduce a graduated income tax.  Not only did the initiative pass, but it won by a landslide, with over 70% approval.  However, it went on to be struck down by the courts and has been followed by 4 consecutive failed attempts to bring an income tax to Washington through the ballot. The People’s Initiative 69 was successful because of the blurring of the urban rural divide, dire economic realities, and a shifting domestic marketplace.  It was accompanied on the ballot by another tax reform initiative, People’s Initiative 64.  Initiative 69 was the first and only income tax initiative to pass in Washington State and set the stage for dramatic tax reform that culminated in the passage of the Revenue Act of 1935 (you can read more about the Revenue Act here), which remains as the blueprint for our current tax code.

Initiative 69 was placed on the ballot on November 8, 1932 and read as follows:

An Act relating to and requiring the payment of a graduated tax on the incomes of persons, firms, corporations, associations, joint stock companies and common law trusts, the proceeds there from to be placed in the state current school fund and other state funds, as a means of reducing or eliminating the annual tax on general property which now provides revenues for such funds; providing penalties for violation; and making an appropriation from the general fund of the state treasury for paying expenses of administration of the act.

There were a total of 5 initiatives on the ballot in 1932.   They represented a wide spread of populist interest addressing (in addition to tax reform) elections, campaigns, and alcohol consumption.

Initiative 69 sprang out of an anti-property tax sentiment that was spearheaded by advocates in the Washington Grange Association, including Charles Hodde, who worked diligently to gather the necessary signatures for placement on the ballot.  As its ballot description states, Initiative 69 was the direct result of an understanding that property tax alone was not going to fairly and adequately fund vital public programs - education being at the top of the list.  An overdependence on one revenue stream left rural Washingtonians feeling jilted as they saw their property tax bills continually raise. 

Supported by labor, agriculture, and education; initiative 69 earned 322,919 votes and won by a margin of almost 3:1! The success of this initiative is a key lesson in the importance of coalition building and working towards common interest.  Perhaps a glimpse backwards will give the bearing necessary to move forwards?