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Why We Don't Have an Income Tax in Washington State

Thursday, May 25, 2006

Have you ever wondered why we don't have an income tax in Washington State? I pondered that question, too. It turns out that the reason we don't have one is because our State Constitution expressly prohibits the kind of income tax that is so appealing to socialists--the graduated income tax. We could have an income tax, but it would have to be levied at a specific rate on all property in a class. This is why attempts to institute a graduated income tax have failed. Specifically, the greedy buggers want to tax the rich at a much higher rate than the poor. The Washington State Constitution says that the rate of taxation must be uniform. Let's review what is stated in the constitution:


     SECTION 1 TAXATION. The power of taxation shall never be suspended, surrendered or contracted away. All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax and shall be levied and collected for public purposes only. The word "property" as used herein shall mean and include everything, whether tangible or intangible, subject to ownership. All real estate shall constitute one class: Provided, That the legislature may tax mines and mineral resources and lands devoted to reforestation by either a yield tax or an ad valorem tax at such rate as it may fix, or by both. Such property as the legislature may by general laws provide shall be exempt from taxation. Property of the United States and of the state, counties, school districts and other municipal corporations, and credits secured by property actually taxed in this state, not exceeding in value the value of such property, shall be exempt from taxation. The legislature shall have power, by appropriate legislation, to exempt personal property to the amount of three thousand ($3,000.00) dollars for each head of a family liable to assessment and taxation under the provisions of the laws of this state of which the individual is the actual bona fide owner. [AMENDMENT 81, 1988 House Joint Resolution No. 4222, p 1551. Approved November 8, 1988.]
I'm not sure why these specific words were chosen, but because they were strung together in this particular way they have effectively kept our incomes safe from taxation--at least at the state level. While trying to defend the various state income tax acts in the courts, challenges were mounted against the specific language of the 14th Amendment which states, "The word 'property' as used herein shall mean and include everything, whether tangible or intangible, subject to ownership." Fortunately, it was decided (repeatedly) that "income" was to be considered "property" and would,therefore, be subject to the uniformity clause of the 14th Amendment. Here's a quote from Culliton v. Chase:
It would certainly defy the ingenuity of the most profound lexicographer to formulate a more comprehensive definition of "property." It is "everything, whether tangible or intangible, subject to ownership." Income is either property under our fourteenth amendment, or no one owns it. If that is true, any one can use our incomes who has the power to seize or obtain them by foul means. There being no other classifications in our constitution but real and personal property and intangible property, incomes necessarily fall within the category of intangible property. No more positive, precise and compelling language could have been used than was used in those words of our fourteenth amendment. It needs no technical construction to tell what those words mean. The overwhelming weight of judicial authority is that "income" is property and a tax upon income is a tax upon property.
For further reading (aka homework) I'll refer you to the following cases on this subject matter:
In closing, I want to pose the following question: If the states created the federal government through a grant of power, the people created the states through a similar grant of power, and the people of this state chose not to grant the power to tax a certain class of property in a specific way, how could it be, then, that the federal government suddenly claims to have that power? Wouldn't this be a usurpation of power? Let me put it another way: Let's say that I, being a citizen and having the authority to possess both nickels and dimes, gave Bob, who's representing a state, the power to possess nickels but not dimes. Bob, having the power to possess just nickels, then gives John, who's representing the federal government, the power to possess nickels, too. But because Bob does not possess the original power to possess dimes he cannot transfer that power to someone else. Therefore, would it not seem suspicious if John came to collect dimes from me? Where did his assumed power come from? I'll be looking at this question closer in a future post...


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