We’ve been following the stories of the State of Washington’s recent adoption of a tax on income in excess of one million dollars per year. There’s lots of talk about this income tax violating the State Constitution, also.
We’re not up on our Washington constitutional law, so we were intrigued: does the state constitution really ban income taxation? We found the answer interesting (and based in our favorite topic, property), so we thought we would post it here.
Turns out the Washington Constitution does not expressly bar income taxation. Instead, it contains a requirement (added in the 1930s by the Fourteenth Amendment to the Washington Constitution) that “[a]ll 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.” You might think this is a limitation only on classic “property taxes” (ad valorem tax on the value of real estate).
But in Culliton v. Chase, 174 Wash. 363, 25 P.2d 91 (1933), the en banc Washington Supreme Court held that the constitution’s definition of “property” included such things as income. The Fourteenth Amendment expressly defines the term property:
The word “property” as used herein shall mean and include everything, whether tangible or intangible, subject to ownership.
The Cullition court held that income tax isn’t uniform, so if income is “property,” then a tax on income is covered by the amendment and is illegal. And sure enough, the court held that the constitutional definition of “property” was broad, and covered things such as income. Pointing to the use of the word “everything,” the court concluded that “property” was intended to be comprehensive:
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.
Id. at 374.
So there you have it.
Whether the new income-y tax is a tax on property remains to be seen. We may not be experts on Washington constitutional law, nor will we be subject to these taxes if it survives. But we like comprehensive and expansive definitions of “property,” so we shall continue to follow along.
Culliton v. Chase, 174 Wash. 363, 25 P.2d 91 (1933) (en banc)