By Rachel La Corte
The Associated Press
OLYMPIA — The notion of a state income tax, long politically taboo, is officially being considered by top Senate Democrats — but Gov. Chris Gregoire says she is opposed to the concept.
Senate Majority Leader Lisa Brown, D-Spokane, said Thursday that she and her caucus are still weighing the idea of an income tax on the state’s highest earners.
“I agree that there are constitutional and legal challenges that will be brought forward; however, we have to come back to the fundamental question of the fairness of our system,” Brown said.
“And it’s not fair that our more affluent citizens don’t pay their fair share.”
Brown’s comments came after Gregoire said she opposed a state income tax.
State Sen. Jeanne Kohl-Welles, D-Seattle, introduced the proposal Wednesday.
Kohl-Welles’ plan would impose a 1 percent income tax on people making more than $500,000 a year, single heads of a household making more than $750,000 and married couples making more than $1 million.
Gregoire against
“I recognize the tremendous difficulties that legislators are facing as they craft a budget under these challenging economic conditions,” Gregoire said in a statement.
“However, as I have stated before, I do not support a state income tax.”
Gregoire raised concerns about potential time-consuming legal battles, saying an income tax “probably wouldn’t bring in new revenue in time to address the economic crisis we face.”
Lawmakers are trying to plug a projected $9 billion budget hole through mid-2011, and House and Senate Democrats introduced cut-heavy budget proposals earlier this week.
Brown previously raised the issue of an income tax on her blog, noting Tuesday that New York was considering a higher tax rate for top earners.
She wrote that New York’s plan would be “a fair and stable way” of dealing with that state’s declining revenue.
On Thursday, Brown said the timing of Kohl-Welles’ bill was coincidental to her blog postings and came after the caucus had a “pretty freewheeling discussion about the unfairness of the tax structure.
“The caucus is considering where we want to go from here,” she said.
“We don’t have a time line, because we don’t have a specific proposal.”
Brown said she still is weighing whether to introduce her own income tax bill and that the caucus is just starting to discuss what a viable proposal would look like.
Any income tax proposal would only focus on the state’s highest earners, she said.
“Nineteen out of 20 people in Washington state would not be affected at all,” she said.
Washington is one of only a handful of states without a state income tax.
In 1932, Washington voters approved an initiative establishing a personal income tax, but it was later struck down by the state Supreme Court.
Since then voters have rejected several income tax proposals.
The most recent, in 1973, was defeated by 77 percent.
Brown said she’s not sure whether voters are ready for an income tax discussion but added that many lawmakers feel the proposed budget cuts are too deep and that “the effects of this are going to be very negative for schools and our communities.”
Brown also said that an increase in the sales tax isn’t the way to go unless there was a tax credit for poor families as well.
“We can’t go to middle-class families and low-income families and ask them to make more of a sacrifice when our tax system is so unfair,” she said.
Sen. Margarita Prentice, D-Renton, chairwoman of the Senate Ways and Means Committee, said that while she was inclined to give income tax bills a hearing, she doesn’t think voters would approve such a measure.
“Voters are in no mood,” Prentice said.
“I don’t know when there will ever be the time. It’s one of these things where, you say ‘income tax’ here, people shut down. You’ve got to read your voters.”
Under a voter-approved initiative, any tax increases must be approved by two-thirds of the Legislature or go before voters for binding approval.
House Speaker Frank Chopp, D-Seattle, said his caucus is considering several ideas and will try to reach an agreement in the next week.
“The key to keep in mind is, what will the public support?” Chopp said.
He noted that in 2006, voters rejected an attempt to repeal an inheritance tax that lawmakers approved in 2005.
That law taxes estates worth more than $2 million but exempts family farms and timber lands.
“The public generally doesn’t support a general income tax, and they were very supportive of the estate tax that did put a tax on wealthy estates, so that gives you some indication,” he said.
“I’m for whatever the public will support in this. They might be open to that.”
Now that both chambers have issued draft budgets, top lawmakers begin high-pressure negotiations to find common ground and adjourn by the April 26 deadline.
It is widely expected that voters will be asked to raise their own taxes to help avoid the deepest budget cuts, particularly in education and health care.
Minority Republicans said a “millionaire’s tax” is a slippery slope to a statewide income tax.
“The public isn’t ignorant,” said Sen. Joe Zarelli, R-Ridgefield.
“You’ll start there and that will be the beginning of an implementation of an income tax for all wage earners.”
