Initiative to ban state and local income taxes advances in Washington state

House and Senate committees in the Washington State Legislature on Friday morning gave a do-pass recommendation to Initiative 2111 to ban state and local jurisdictions from imposing a tax on personal income, moving the initiative one step closer to becoming law.

On Tuesday, I-2111 was the subject of a public hearing in Olympia before a joint session of the House Finance Committee and the Senate Ways & Means Committees that drew a large in-person crowd. Additionally, more than 6,000 people signed into the public hearing to support the initiative, while nearly 650 signed in against the measure.

The House Finance Committee passed I-2111 out of executive session on a 7-5 vote with one excused absence.

Rep. Cyndy Jacobsen, R-Puyallup, praised the initiative before the vote.

“Washington is only one of nine states that does not have an income tax, and it gives us a competitive advantage in many ways,” she said. “States that don’t have an income tax – Tennessee, Florida, Texas – have been enjoying an influx of people and commerce, and it’s just generated good economic times for them.”

Committee Chair Rep. April Berg, D-Mill Creek, said she would vote yes but noted, “It was made very clear by the testimony we heard earlier this week that this particular initiative does not touch or change any of our current taxes or tax statutes. That was very important to me.”

A short time later, the Senate Ways & Means Committee passed I-2111 out of executive session.

Sen. Lynda Wilson, R-Vancouver, reiterated Jacobsen’s point.

“We are a state right now that has no income tax, but that doesn’t mean that it can’t be, because it’s in our constitution that says it has to be uniform but an income tax can be created,” Wilson said in speaking before the committee’s vote.

Washington’s constitution stipulates that any income or property tax must be uniform and cannot exceed 1%.

Sen. Jamie Pedersen, D-Seattle, had a different take on I-2111, saying he was relieved the measure would not impact Washington’s new capital gains tax that brought in nearly $900 million in its first year, according to the state Department of Revenue.

He dismissed the possibility of a state income tax.

“I do think it’s clear without a constitutional amendment we have no likelihood that there would be an income tax in our state, so I guess in that sense … the initiative is largely harmless,” Pedersen noted.

Pedersen is on record having said that he hoped the state Supreme Court, ruling on the constitutionality of the capital gains tax, would clear the way for a state income tax.

The Washington Supreme Court upheld the constitutionality of the tax in March 2023, ruling 7-2 in favor of the argument that the tax is constitutional because it is an excise tax, which is a tax on a good or service, and not a property tax.

The state’s highest court has long ruled that a statewide graduated income tax in Washington is unconstitutional. On 11 separate occasions, Washington voters have rejected ballot measures that would have allowed the state to adopt one.