NEWS: State tax agency shouldn’t act like new income tax is ‘done deal,’ says Republican budget leader

VANCOUVER… The state Senate’s Republican budget leader questions why state government’s tax collector is continuing to work on a rule for implementing the new state income tax struck down by a Douglas County judge eight months ago.

“I can understand why the Democrat legislators who approved the state income tax would hope the state Supreme Court will reinstate it,” said Sen. Lynda Wilson, R-Vancouver. “But the Department of Revenue is acting like the justices have already overruled the lower court, even though the case hasn’t even been argued before them yet. As if it’s a done deal.”

The state’s high court today announced oral arguments will be heard Jan. 26.

“DOR shouldn’t keep spending taxpayer dollars toward collecting a tax that no longer exists. It isn’t justified, and besides, tax collectors should have plenty of other work due to all the other taxes Democrats have imposed in the past several years,” said Wilson, who is lead Republican on the Senate Ways and Means Committee. “I expect Revenue will claim it’s just trying to be efficient, in case the current group of justices goes against case law that has stood for nearly 90 years. But there’s such a thing as being too efficient, and to me this seems more like a whole new kind of government waste.

“Even though Governor Inslee also wants a state income tax, he could and should put the brakes on this unauthorized rule-making. You can’t talk about threats to our democracy then turn around and pretend a court ruling doesn’t exist simply because it goes against your agenda.”

The state income tax was adopted by Democrats in 2021, during the height of the COVID-19 pandemic when the public was barred from the Senate and House chambers. It would have applied to profits from the sale of certain assets – known as “capital gains,” which are considered income by the Internal Revenue Service and every state where they are taxed. The now-invalid legislation has been acknowledged by supporters in the Legislature as part of an effort to enact a full-blown income tax in Washington, despite a long history of voter opposition.

Legal challenges were filed that summer, with the Douglas County ruling coming March 1, just before the end of this year’s legislative session.

Wilson noted the Legislature’s bipartisan Joint Administrative Rules Review Committee, which has selective oversight of administrative rules, was recently petitioned to intervene on the grounds that the proposed rule is “inconsistent with current legal authority.”

The Citizen Action Defense Fund, which filed the petition, points out that the income-tax statute is void because the state chose not to seek a stay of the Douglas County ruling. Wilson says that invalidates DOR’s rule-making authority related to the former law.