As we mentioned in our most recent newsletter, a group called Opportunity for Olympia is circulating petitions for a local income tax. In a study session with the Olympia City Council yesterday, Hugh Spitzer, a legal scholar who served as vice chair of the Tax Structure Study Committee in 2002, said the effort would not likely pass constitutional muster with the state Supreme Court.
According to the Olympian newspaper,
Spitzer sees the Olympia proposal as a “test case” that will attempt to address the constitutionality of the state’s ban on an income tax. However, he predicts that a court will rule that code cities such as Olympia cannot tax individual income.
“People will wind up being quite disappointed,” Spitzer told the council.
Last week the Olympian reported on the signature gathering effort and the initiative.
…the proposal calls for creating a 1.5 percent tax on household income in excess of $200,000. Organizers estimate about 750 households in Olympia city limits would be subject to the tax, which would raise about $2.5 million a year.
Aside from the legal questions, city officials are concerned about the potential administration costs.
According to the petition, the city would be responsible for collecting the tax. And if voters approve the tax, the city must decide whether to defend the decision — at taxpayer expense — in a likely court challenge that Spitzer predicts could last 18 months or longer depending on appeals.
Conceivable, the measure could receive the necessary signatures and face a legal challenge that would keep it off the ballot. But, if it does receive the signatures and reach the ballot…
Regardless of the eventual cost to the city, several council members agreed the proposal has a good chance of passing at the polls.
The local income tax measure, like various municipal minimum wage and paid leave initiatives, is, as Spitzer says, a “test case” and a possible prelude to another statewide income tax initiative.