Commentary: Supreme Court’s income tax ruling clouds encouraging news about budgets


The no-new-taxes operating budget proposal introduced in the Senate this session is a welcome turnaround.

To be clear, there is no more need for new taxes this year than there was in either 2019 or 2021, when Democrats piled new ones onto Washington families and employers even though the state didn’t need more revenue.

There also is more reason now to take a conservative approach. The state’s chief economist recently warned a slowdown in economic activity is coming. Growth will still be positive, just at a slower rate.

I attribute this dose of conservatism in the Senate budget proposal to how the bill was written. To its credit, the majority Democrats included Senate Republicans in the budget discussions from start to finish, meaning from early January through this past week. Normally, the Senate Democrats have allowed us at the table only for the first round of budget development, maybe the second.

It’s still a Democratic proposal, if you look at many of the major spending priorities. The minority side never gets all it wants. But as a member of our budget team put it, Republican priorities are peppered throughout the plan.

Because Republicans were at the table, we could advocate for controlling spending, as well as avoiding tax increases. The result is a 2023-25 Senate proposal that does not require a tax increase to balance and would grow spending less than 8% from the 2021-23 budget. That’s a big step toward getting a handle on our state’s affordability crisis — a Republican priority — considering the many tax hikes approved in 2019 and 2021, and how average spending growth was around 19% for the previous three budget cycles.

At the same time, Republicans also convinced Democrats to make investments in key policy areas. Support for public safety, another of our priorities, is seen in things like the appropriation of funds for regional criminal justice training centers. These will help rebuild the law enforcement presence in our communities by improving access to the training new officers need before they can patrol our streets and roads.

I’m especially encouraged by the progress toward the third of our three session priorities, which is to “reboot” K-12 education with funding specifically geared to students’ recovery from the pandemic-caused learning loss.

Over the 2023-2025 biennium, the Senate budget proposal would put $57 million into a competitive grant pool where school districts can submit plans to advance student progress and address learning loss. It includes $7 million for intensive tutoring. And it provides $2 million for an innovative and interactive mathematics instructional tool.

Our side of the aisle has tried for years to see that special education students are treated equitably and it looks like we are finally getting there. The Senate budget proposal would supply an additional $800 million for special education programs and would include support for advocates to help students and parents with individual education plans. This assistance is long overdue.

The Senate’s capital budget for this session also represents a step forward in how taxpayer dollars are invested in communities. Thanks to Republican input, it’s especially strong on funding to help with the state’s shortage of housing people can afford, without the need for the $4 billion homelessness scheme still being pushed by the governor. There’s a big dose of support to increase behavioral health treatment capacity, including more beds at the Maple Lane facility in the 20th District.

But then the state Supreme Court had to put a cloud over these encouraging developments by siding with the Democrats over the capital gains tax they approved in 2021.

The money made from selling assets — like stocks, bonds and mutual funds — is known as capital gains. Every other state that has an income tax, as well as the Internal Revenue Service, views it as taxable income.

Two years ago, when debating the bill in the Senate and House, Democrats claimed their capital gains tax is not an income tax but an excise tax. A year ago, that argument was rejected by a judge in Douglas County, where the Quinn v. State lawsuit was filed. Now the Supreme Court has overturned that decision on appeal. I think the justices got it wrong.

As I understand it, the court ruling does not support the Democrats’ openly admitted campaign to use the capital gains tax as a springboard to a full-blown income tax in our state, something they have coveted for many years. That’s good. However, Democrats can now start to adjust the language about who must pay this so-called excise tax, so it applies to more people. That’s bad. We also expect them to keep pursuing a state income tax. That’s even worse.

Whatever you call it — excise or income — the tax upheld by the high court can be reduced or repealed, like any other tax. I believe that would happen if the membership of the Legislature was more conservative. For now, I’ll have to focus on defending the more conservative Senate budget proposal against the bigger-spending, new-taxes budget that will very likely be proposed by the House Democrat majority. We must do better.


Sen. John Braun of Centralia serves the 20th Legislative District, which spans parts of four counties from Yelm to Vancouver. He became Senate Republican leader in 2020.