Nearly two dozen municipalities in Washington state have banned income taxes

Some 22 cities and counties in Washington state have adopted ordinances that prohibit the imposition of a local income tax.

Pasco, located southeast of Yakima, became the 14th city to adopt such a ban when the city council approved a resolution Monday.

It joins the cities of DuPont, Battle Ground, Granger, Grand Coulee, Longview, Kennewick, Moses Lake, Richland, West Richland, Spokane, Spokane Valley, Union Gap and Yakima.

A total of eight counties — Asotin, Benton, Chelan, Douglas, Franklin, Grant, Spokane and Yakima — have done the same.

“Such a tax would be a direct conflict with the high value the City places on promoting economic development through the attraction and expansion of financially healthy, family wage paying employers,” according to the resolution passed by the Pasco City Council.

All but one of the cities and counties have adopted the measure on a vote by elected officials. Voters in the city of Yakima last year approved a charter amendment banning income taxes by a margin of 78-22. In addition, 61% of voters recommended that legislators repeal a new capital gains tax.

“As more cities and counties act to ban a local income tax, hopefully this clear and consistent message opposing an income tax will finally be heard by state lawmakers and the governor,” wrote Jason Mercier, director of the Center for Government Reform at the Washington Policy Center.

The vote in Pasco comes as legislators consider a bill, SB 5554, allowing local governments to impose a graduated income tax.

At play here are two court cases.

The state Supreme Court in April of 2020 struck down an attempt by Seattle to impose an income tax on wealthy households. The city council there in 2017 approved a 2.25 percent tax on individuals earning more than $250,000 and couples earning more than $500,000.

Estimates showed the tax would bring in about $40 million a year for the city.

Both the King County Superior Court and the State Court of Appeals ruled against the tax and the Supreme Court declined the city’s request for a review. The main reason the tax was overturned is because income is considered property and the state constitution says property must be taxed evenly.

The Supreme Court did, however, let stand an appellate court decision last year that overturned a 1984 law banning taxes on net income.

That move opened the door for cities to impose a 1% flat tax on net income.

Legislators last year also approved a new law, to begin this year, that would impose a 7% tax on long-term capital gains in excess of $250,000 and is estimated to net the state $500 million annually.