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Here come the expanded income taxes in Washington

Updated: Jul 21, 2023

They said it wouldn’t happen. It only took a few weeks to prove they were wrong.

Following the Washington State Supreme Court’s ruling on a new state income tax, some Washington state Legislators are already moving to expand it to more people, and more income.

The justices ruled 7-2 in March that a capital gains income tax wasn’t an income tax because legislators called it an “excise tax.” Every other state in the union – along with the IRS – labels a capital gains tax an income tax.

But because Washington’s constitution has limitations on taxing property – and because previous courts have ruled that your income is your property – the court sought a different way to uphold the tax. Because legislators called it an “excise” tax, the court signed off.

Now, legislators are moving quickly to expand the new “excise” tax on other sources of income. SB 5767 in the Washington state Legislature seeks to “fund health care access by imposing an excise tax on the annual compensation paid to certain highly compensated hospital employees.”

In other words, an income tax. Just don’t call it an income tax.

How long will it be until there's a bill targeting your job with an income tax that's labeled an "excise tax?"

The court’s ruling is already causing damage in the state’s economy. Some businesses have announced they are moving their headquarters out of the state.

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