(The Center Square) – As Washington state prepares to collect its first-ever income tax on millionaires, one state agency is gearing up for a major hiring blitz to handle the administrative workload of ensuring millionaires pay what they will owe.
The tax doesn’t officially start until 2029, but the Department of Revenue is planning now to hire more than 300 new government employees over the next few years, with the first of those new employees to be hired this summer. The legal challenges against the tax are ramping up.
“I think the amount of money and the number of people they’re hiring exposes exactly what we’ve been saying in that this is not designed to be a small, limited tax on a small number of people,” said Let’s Go Washington Founder Brian Heywood in a Friday morning interview with The Center Square. “This is putting in place the infrastructure for a broad income tax.”
The tax is expected to collect between $3 billion and $4 billion from more than 20,000 wealthy households every year, starting in 2029.
Between employee government payroll and benefits and new office equipment and software, the state expects to spend more than $557 million by the time the tax kicks in.
A large chunk of that is for expanded tax subsidies for the Working Families Tax Credit included in the bill, but according to DOR, about $45 million will cover the wages of the hundreds of new state employees, as reported by The Seattle Times.
“It’s clear that they’re building out an infrastructure to collect a broad-based income tax,” Heywood said. “There’s no doubt about that. Any of them that say they’re not doing it are just straight up lying to the public.”
On Thursday, former Washington State Attorney General Rob McKenna, Citizen Action Defense Fund (CADF) and former Supreme Court Justice and State Senator Phil Talmadge filed a lawsuit in Klickitat County Superior Court challenging the newly enacted income tax, arguing it is unconstitutional.
“This was decided by the voters of Washington state when they enacted Amendment 14 to the Constitution in 1930,” said McKenna in Thursday’s press conference announcing the lawsuit. “The express purpose of that amendment was to expand the definition of property, to cover everything, whether tangible or intangible, subject to ownership. Every Supreme Court panel that’s looked at the question has reached the same conclusion. Income is subject to ownership. So, unless you think you don’t have an ownership interest in your income, you have to see that income, in fact, is part of property.”
Heywood and LGW have their own legal challenge to the income tax proceeding on a separate path, pushing for voters to have a chance to weigh in.
“The attorney general has to respond by today to our writ of mandamus and then we have until next Tuesday to respond to their response,” said Heywood. “And then it goes to the entire Supreme Court on April 30.”
LGW’s suit is directed at Secretary of State (SOS) Steve Hobbs who refused to process a referendum on the income tax, citing the “necessity clause” in the bill.
In its rejection, Hobb’s office cited a Constitutional reference that Heywood contends does not exist.
“…except those laws deemed necessary for the immediate preservation of public peace, health, or safety, or for the support of the state government and its existing public institutions.”
Heywood notes the Constitution as actually written reads:
“…except such laws as may be necessary for the immediate preservation of the public peace, health or safety, support of the state government and its existing public institutions.”
LGW says inserting the phrase “or for” changes the standard into two independent exemption grounds for a referendum.
Assuming the new income tax is not repealed by voters or overturned by the courts, the revenue collected will be directed to the state’s operating fund for schools and state services. Additional revenues will be used to eliminate sales taxes on hygiene products, diapers and some over-the-counter medicine. The measure also increases the business and occupation tax filing threshold to $300,000 in annual gross revenue, which is aimed at helping small businesses.
The Department of Revenue did not immediately respond to requests for information. The agency is expected to begin hiring for the new positions after the start of the fiscal year, which begins July 1.
