Sheldon says starter income-tax bill is end-run around the people

One of four Democrats to vote against measure – calls it dishonest tactic to avoid public vote

To see floor speech, click here.

OLYMPIA – State Sen. Tim Sheldon says Saturday’s vote for a starter income tax in the state Senate is historic – because it shows the lengths income-tax advocates will go to get around the people.

“It’s another vote that will split the state,” he said.

Sheldon was one of four Democrats to vote against SB 5096, the governor’s income-tax bill. Yet the measure passed 25-24 entirely with Democratic support. All Republicans voted against the bill, which now moves to the House for further consideration.

The bill creates a narrow income tax on capital gains over $250,000, capturing mainly income from stock sales. Sheldon said the bill opens the door to a broad-based income tax on all taxpayers because it sets up a test case for the state Supreme Court that could allow it to overturn its 1933 ruling that an income tax is unconstitutional. If that occurs, the Legislature could enact a broad-based income tax with a simple majority vote.

“The honest way to propose an income tax is with a constitutional amendment,” he said. “And that would take a two-thirds vote of the Legislature, and then a majority vote of the citizens.

“Moving this farther ahead takes us closer to a crisis, a crisis of credibility, of the Legislature. Are we listening?”

Sheldon, longest-serving member of the Legislature, said the debate on the income tax deserves a vote of the people. They have voted against an income tax 10 times since 1934.

Sheldon recalled his service on former Gov. Booth Gardner’s tax commission in 1992, as it gathered testimony from across the state on tax reform – and on Gardner’s own income-tax proposal. Even though that proposal offered a reduction in other taxes, the public just didn’t buy it.

“That was a real eye-opener for me,” he said. “I saw the Department of Revenue having a very difficult time convincing those who attended these meetings that an income tax was a wise idea.”

Sheldon explained that the people are skeptical of any promise that an income tax would remain a tax on the rich for very long. He noted the long history of income taxes in other states that have been sold as levies on the rich, only to be expanded to the middle class when tax collections run short. “People are just very distrustful of government,” he said.