Our highly regressive and unsustainable tax structure? It's the Washington State Supreme Court's fault. And that's part of what pisses me off about yesterday's hearing on Initiative 1053's clearly unconstitutional two-thirds supermajority requirement for raising taxes.
From the founding of the Washington territory in 1853 until the depth of the Great Depression, the primary revenue source for the state was the property tax, a tax that became increasing ill-suited to our industrializing economy, and that rose ever higher as government services expanded to meet Depression-era needs. By 1930 the average property tax was 2.8 percent of property value annually (compared to less than 1 percent today). Faced with plummeting tax revenues and skyrocketing delinquencies, a tax overhaul was sorely needed.
In 1932 voters took things into their own hands by running and passing two statewide initiatives. The first capped the state property tax levy at 0.4 percent annually, a cap that remains today. The second implemented progressive personal and corporate income taxes, a measure that passed by a 70-30 margin.
But wealthy businesses challenged the income tax, claiming it violated the uniformity clause of the state constitution, and in a landmark 1933 decision a 5-4 majority of the state supreme court agreed, by interpreting income as property (rather than a transaction), an interpretation for which there remains no legal precedent anywhere in the US outside of Washington state. (Think about it: Washington's courts consider income to be property, but not revenue. Go figure.)
The income tax was tossed out, but the property tax-slashing initiative remained in place.
Faced with a revenue crisis, the 1933 legislature quickly cobbled together a "temporary" tax system based on the B&O tax and and a highly regressive sale tax. We've been living with this temporary tax system ever since.
There have been repeated legislative efforts to overhaul our tax structure over the past 80 years, but none have surmounted the constitutional hurdle erected in 1933. And now these two-thirds supermajority provisions make it legislatively impossible to even tinker with our existing tax code, because no tax increase can ever get the two-thirds supermajority required.
There is no question that I-1053 is unconstitutional on the merits. The plain language of the constitution makes that clear. But so far our popularly elected justices have weaseled out of making that unpopular decision by repeatedly ruling that the issue isn't justiciable—that no plaintiff has standing to challenge the initiative, or that issue isn't yet ripe. It is this judicial cowardice, not the so-called "will of the people," that has legally tied legislators hand for much of the past 18 years.
Considering its historical role in creating our craphole of a tax structure, the very least the court owes the state is a ruling that settles the supermajority question once and for all.