Initiative 1098

Washington State has a long and complicated history with state income tax. I won’t go into all of it in this post (you’re welcome), but it’s important to know some basics. When Washington became a territory in 1889, a system of taxation had to be implemented. During this time, most of the power in the state came from the landowners aka the farmers (you may remember our previous post on Charles Hodde and the WA State Grange Association). Property tax, which included farmland, accounted for most of the revenue in the state in the early 1900s. As the population and demand for services grew, the farmers’ concern (understandably) increased, and thus began the quest by the Grange Association, labor organizers, and others to get the state to adopt an income tax. In 1932, I-69 was passed by the voters but ended up being struck down by the State Supreme Court. (You can find much more information on I-69 by checking out Justin’s post.)

In 1935, the legislature passed a tax package that created Washington’s tax structure that we still use today (Justin also wrote a summary post on the revenue act which you can check out for more info). With the passage of the revenue act, the pressure was off the property tax for supporting most of the services provided by the state, although it still is one of the three major taxing sources.  If you want a very detailed and interesting account of the battle for an income tax in Washington State, check out Phil Roberts’ book A Penny for the Governor, a Dollar for Uncle Sam.

I know this is a lot of background, but that’s because income taxation in Washington is a really scandalous topic. All of the times the State Supreme Court overruled or the governor vetoed an attempt at a state income tax was because of a little clause in Washington’s State Constitution. In Article VII, Sec. (1), the constitution reads, All taxes shall be uniform upon the same class of property within the territorial limits and, the work ‘property’ as used herein shall mean and include everything, whether tangible or intangible, subject to ownership. This section creates definite limitations to taxation and has been the reason why Washington’s Supreme Court has ruled against a graduated income tax. All of this information really means that it’s a complicated and trying process to get massive tax reform passed for the whole state. 


Stay tuned for part II when we look at the latest effort to adopt an income tax—Initiative 1098!