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But Washington voters probably won't back an income tax just because special levies have risen once again to the percentage of school budgets that the supreme court, in 1978, found unconstitutional. To make that decision, voters may need a little 21st-century populist fervor, possibly stoked by ambient anger toward Wall Street bonuses and bailouts.
But even that won't matter if the supreme court still believes that income is property, that a class of property must be taxed uniformly, and that therefore, a graduated net income tax would be unconstitutional. (Since 1972, right after the Boeing recession in which unemployment hit 15 percent, the constitution has also limited property taxation to an aggregate 1 percent.) The court still believed that back in 1951, saying “it is no longer subject to question in this court that income is property.”
And the state attorney general's office still believed that in 1974, when it conceded: “it is possible that the supreme court, as presently constituted, could be persuaded to reverse its earlier rulings,” but insisted that “until and unless those decisions are . . . overruled, we must continue to be guided by them and so conclude that at this time, the constitution of this state continues to prohibit the imposition of a tax upon corporate or individual net income”
At this time, however, one might conclude otherwise. In Appendix B of the 2002 report of the Washington State Tax Structure Study Committee — which Gates chaired — Seattle attorney Hugh Spitzer, who teaches Washington constitutional law at the University of Washington Law School, suggested that the question was ripe for reexamination. “Many people assume that Culliton is still good law and that Washington courts would reach a similar decision today,” Spitzer wrote. “However, there is ample reason to believe that a modern income tax, established by the Legislature or by the voters, would now be upheld.”
In a 1993 University of Puget Sound Law Review article, Spitzer explained that “the swing votes (and lead opinion) in the 1933 Culliton decision . . . were based on a misconstruing of [an] earlier ruling in Aberdeen.” The Aberdeen court ruling — which emphasized the narrowness of its focus — wasn't interpreting the Washington constitution at all; it was applying the Due Process clause of the United States constitution. Besides, two U.S. Supreme Court precedents on which Aberdeen relied have long since been overturned. Because of all that, Spitzer suggested that “opponents of a net income tax today would face an uphill battle.”
Gates certainly assumes that if 1077 passes, the court will take a fresh look at the issue. And he figures that Spitzer's reasoning will prevail.
Why didn't he avoid the legal issues altogether by going for a constitutional amendment? Because amending the constitution would require a two-thirds vote of the legislature, and he knows that isn't going to happen. So — just like the king of anti-tax initiatives, Tim Eyman — Gates is bypassing the legislature and going directly to the people. Ironically, many citizens who tend to favor an income tax tend to deplore Eyman's tactic of legislating by initiative. But both sides in the tax debate seem to agree: Our elected legislators are the problem, not the solution.,
Gates was clearly disappointed when his 2002 committee report sank into the swamps of Olympia without a trace. The legislature, which had commissioned it, didn't react. (A few years before Initiative 69, another blue-ribbon commission recommended an income tax, and the legislature passed one — but the governor vetoed it.) In fact, “nobody paid much attention to it,” he says, “including the governor.”
That 2002 report pointed out, in Gates' words, “how lopside[ly] the burden of taxation fell” in this state. It called for a tax system that would be, among other things, “fairer to low- and middle-income people” and “more effective in supporting the state’s economy.” It proposed a flat-rate income tax. Why hasn't Gates stuck with the flat-tax proposal? Because the goal is to not only to reduce other taxes but also to funnel more money to schools and basic health. And with a tax imposed on only 3 or 4 percent of Washington citizens, a flat tax wouldn't generate enough cash. Gates says frankly that a graduated tax is the only way “to generate enough funding.”
Gates himself has favored a graduated tax from the get-go. When did he get religion on this subject? “I'm not sure,” he says, “whether I was 13 or 17.”
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