State touts lack of income tax

OLYMPIA – Washington state touts its lack of an income tax in a current magazine supplement designed to attract business to the state. Not mentioned in the Fortune magazine special section is the fact that that could change in a few months.

In three different places in an “advertorial” in the current issue of Fortune, prospective businesses or new residents are told that along with a well-educated work force and access to the great outdoors, one reason to come to Washington is the state has no individual or corporate income tax.

It’s even a factoid graphic when the eight-page supplement lists advantages in Washington By the Numbers: “0 income tax for individuals and businesses” is listed between the high average salary for tech workers ($97,900) and the percentage of adults with a college degree (30 percent).

The state’s lack of an income tax often comes up in comparisons of economic factors. Gov. Chris Gregoire mentioned it last spring when she was trading jabs with Idaho Gov. Butch Otter over whose state was better for business.

And it’s true, at least for now. But an initiative on the Nov. 2 ballot could change that for people making $200,000 or more. Supporters of Initiative 1098 want a tax on so-called “high earners” to replace some business and property taxes, with some money going for education and health services.

That’s a fact not mentioned in the advertorial commissioned by Choose Washington, the state Department of Commerce.

So is the state taking a stand against I-1098, because it would wipe out one of those competitive advantages, or glossing over the prospect that this particular advantage could change in a few months? Neither, said Penny Thomas of the state Commerce Department’s Choose Washington office.

“Right now there isn’t an income tax,” Thomas said. “We just kind of deal with the facts.”

State officials can’t take a position on I-1098 or any other ballot measure, she added.

Choose Washington didn’t write the special supplement, Thomas said. Fortune hired an outside writer to produce the supplement from information the office submitted, and the state reviewed it.

The office did, however, send out a news release announcing the special section this week, saying the state was making a pitch for new business that emphasizes its proximity to Asia, a thriving high-tech community, cheap power rates and … no income tax.

While the state is taking no stand, opponents of I-1098 are likely to seize on the state’s mention of the lack of an income tax being a competitive advantage in the campaign over the initiative.