CON: Olympia ‘income tax’ is really a costly mirage

It asks Olympia residents to approve a 1.5 percent income tax on household incomes over $200,000 to pay the equivalent of a year’s community college tuition for high school graduates and GED earners.

But this is not about going to college; it’s about going to court — at the city’s expense — to see whether the current state Supreme Court will overrule past decisions declaring that a graduated income tax such as this one is unconstitutional.

Olympia Initiative 1 is the brainchild of the Economic Opportunity Institute in Seattle.

Over 97 percent of the $212,000 in campaign contributions to pass the initiative come from King County.

Olympia was picked to be the guinea pig for this venture simply because we are a relatively small, progressive community where they think they have a chance of getting this measure passed.

We urge voters to reject Olympia Initiative 1 for several reasons.

First, if it passes, the city of Olympia is legally obligated to defend it in court, which could cost hundreds of thousands of our tax dollars — money the city needs for roads, public safety, affordable housing and downtown revitalization.

Second, aside from the question of whether it is constitutional, there is a specific state law that prohibits cities from collecting an income tax.

Third, the IRS will not share income tax data with a municipality, so the only way to know who owes the tax would be for all of us to send copies of our tax returns to the city. To process all that data and collect the tax, the city would have to create a tax collection bureaucracy that will cost far more than the initiative allows from its proceeds. This, too, will require the city to take funds from other vital city services.

If people refuse to submit their tax data to the city, or refuse to pay the tax, the initiative has no enforcement provisions.

The initiative has two other glaring flaws. The first is its requirement that the income taxes collected be distributed to all Olympia School District graduates, including families who make enough to owe the proposed tax. That just doesn’t make sense.

Second, Olympia is not an island with captive taxpayers. Passing an income tax would create an incentive for affluent families to settle in Lacey, Tumwater or in unincorporated parts of the county.

We share the concerns of those who think our tax system should be fairer, and that college should be more affordable. But these are issues the state Legislature must address, and our role is to hold them accountable for doing so.

For all these reasons, we urge Olympia voters to reject Initiative 1.

Olympia Mayor Cheryl Selby is owner of a small downtown business. Gerry Alexander is a retired former chief justice of the Washington state Supreme Court.

This story was originally published October 22, 2016 at 11:34 AM with the headline "CON: Olympia ‘income tax’ is really a costly mirage."