Olympia voters may face dueling income tax proposals in November

When November comes around, Olympia voters will likely decide whether to become the first city in Washington to impose a local income tax. In fact, currently, two dueling income tax plans are under consideration.

As Shift reported, a group called Opportunity for Olympia is circulating a petition that calls for creating a 1.5 percent tax on household income in excess of $200,000, impacting Olympia’s “wealthiest households to generate college tuition money for all local high school graduates.”

Supporters say the scheme would raise about $2.5 million a year. They estimate the income tax would be imposed on about 750 households in Olympia city limits.

According to reports, the group has collected 7,340 signatures for the petition. They need 4,702 valid signatures from Olympia residents to qualify for the November ballot.

Alternatively, sensing economic disaster from the petition approach, the city is also pushing its own proposal. Initially, the city wanted to tax “all households earning at least $25,000 a year using a graduated income tax in which the households with the highest income would pay the highest percentage of tax.”

On June 14, the council changed its proposal on a 4-3 vote. The revised proposal would impose an income tax on “unearned income from wealth, such as taxable interest and dividends, for households earning more than $150,000 a year.”

Like its competing initiative, the city’s proposal also claims it would create a college fund available to any graduate of the Olympia School District.

Via the Olympian:

“Another critical difference between the proposals is that the Opportunity for Olympia initiative would become law if approved by voters and must exist as-is. Any changes would require a new initiative and a new public vote.

“However, the City Council already has the power to pass such an ordinance, but will seek a non-binding advisory vote from the public to gauge whether to enact the tax. The City Council would be able to revise the ordinance at will.”

This week, the Olympia City Council was set to decide which proposal it would support. However, councilmembers postponed the decision. The Olympian:

“City Manager Steve Hall was expected to recommend that the council forgo its proposed income tax ordinance and instead allow the petition by Opportunity for Olympia to proceed to the November ballot.

“The recommendation stems from questions and concerns about administration, tax collection, auditing, enforcement and distribution.”

The city manager noted that the council would take up the issue in July.

Perhaps city council members are reconsidering the ridiculous redistribution of wealth schemes due to the plethora of unforeseen consequences. As Shift asked, why would a family earning more than $150,000 (in the case of the city’s plan) or $200,000 (in the case of the original plan) stay in Olympia when they could simply move?

Alas, that is probably wishful thinking. As supporters of the plans admit, it’s not just about paying for kids’ college tuition.

The activist group Opportunity for Olympia admitted that the “bigger picture” is to “present a formidable chink in opposition to a state income tax, and help reform a regressive tax system.” Though, that’s something the group is backtracking on.

Undeniably, the fact that the proposal is unprecedented with highly questionable legality ensures it will face a court challenge if passed. Despite their recent claims, that’s what the supporters want, in hopes that the current ultra-liberal Supreme Court would abandon decades of legal precedent and allow an income tax statewide.