Sound Transit is in the market for a new CEO and recently posted a recruiting brochure. The very first thing highlighted on the compensation and benefits slide after salary is: “No state income tax in Washington.” Sound Transit isn’t the first governmental entity in Washington to say no income tax is an advantage. Here is the Sound Transit job benefits slide: 

Local governments also understand that no income tax is a benefit. At least 24 local governments in the state have adopted income tax bans to protect their citizens and businesses. Kittitas County was the latest to act last week. Kittitas Commissioner Brett Wachsmith said in a press release:

"We do not need a state income tax in Washington State. For too long, our small businesses and private citizens have been negatively impacted by unnecessary state funding requests. We need to promote a healthy environment for our economy to thrive otherwise we will continue to see businesses move elsewhere.”

Washington’s Department of Commerce has also long advertised no income tax as being a competitive advantage for the state. In fact, before the legislature adopted the obviously unconstitutional capital gains income tax last year, Commerce included this slide in its marketing material:

Unfortunately, the adoption of the capital gains income tax has called that advantage into question. For example, the Tax Foundation no longer lists Washington as being one of the states without an income tax in its national comparison of state income tax rates.

This distinction is already costing Washington jobs. During last year’s capital gains income tax debate, I received numerous phone calls and emails from business owners in California thinking of fleeing to Washington to escape California’s crushing income taxes. After learning of Washington’s plans for the capital gains income tax, however, these individuals told me relocating their business to Nevada, Tennessee, Texas, or Florida would be a safer bet. Those states are unequivocally proud of their no income tax advantage, including no taxes on capital gains income.

Not only are some national business owners no longer considering relocating to Washington, but several high-profile individuals have also already left the state. As reported by the Dallas Morning News:

“Amazon’s top retail executive, who has spent the last two decades building the company’s powerful logistics operations, has moved to Highland Park.

Dave Clark, CEO of Amazon worldwide consumer, moved to Texas last fall after selling his $14.5 million home in the Seattle suburb of Medina. An Amazon spokeswoman confirmed the move to The Dallas Morning News.

The move was first reported Thursday by Business Insider, which suggested the relocation was due to a new state tax law in Washington. Washington has imposed a 7% state tax on capital gains starting this year.”

Sound Transit, Washington’s Department of Commerce, and dozens of local governments are right, no income tax is a benefit for individuals and businesses. Hopefully we’ll soon have a court ruling overturning the unconstitutional capital gains income tax so that Washington can once again proudly proclaim to be income tax-free.

Additional Information
Judge hears oral arguments in capital gains income tax case
Tech CEO: Capital gains tax talk costing WA jobs
“Choose Washington” – No income tax