Washington State Supreme Court declares citizen-approved state income tax unconstitutional on September 8, 1933.

  • By Frank Chesley
  • Posted 8/04/2004
  • HistoryLink.org Essay 5726
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On September 8, 1933, the Washington State Supreme Court declares the state’s one-year-old, citizen-approved income tax unconstitutional. Some legal scholars call the reasoning behind the 5-4 decision “tortured” (Roberts). A business-and-occupation tax (which taxes gross receipts of businesses) and a citizen-approved 40-mill (four cent) limit per assessed dollar on property taxes, however, are judged constitutional.

Washington a Property-Tax State

The property tax is a "regressive tax" -- one in which poor and middle-class families pay a far greater percentage of their income in taxes than do the wealthy. The property tax has been Washington state’s primary revenue source since statehood in 1889, but with the progressive period at the turn of the century came demands for reform. Increased demands for government services drove property taxes higher, forcing many farmers into foreclosure.

Washingtonians overwhelmingly supported the Federal Income Tax amendment to the U.S. constitution, ratified on February 3, 1913.

Efforts to pass a state income tax began to accelerate in the 1920s. Farmers, represented by the Washington State Grange, the Washington Education Association (WEA), and urban workers formed a loose coalition to broaden the tax structure.

An income tax proposal passed the Washington State Senate in 1929, but died in a House of Representatives committee. In 1931, a Tax Advisory Committee and the State Tax Commission supported measures proposing personal and corporate income taxes. The bills passed both houses of the state legislature, but Governor Roland Hartley (1864-1952), an obstreperous Republican and Everett lumberman, vetoed them.

Movement for an Income Tax

With the Democratic sweep of 1932, in the depth of the Great Depression, Democrats controlled Washington’s state legislature and all congressional seats. The Parent-Teacher Association (PTA), the Seattle Central Labor Council, the Washington State Grange, and WEA endorsed the graduated income tax. Voters overwhelming (70 percent) approved Initiative 69, which mandated a graduated income tax. Voters also approved a 40-mill (four cent) limit per assessed dollar on property taxes, another issue that would remain contentious.

Under the property tax, farmers were losing their land to foreclosure. In addition, the state was not bringing in enough money to provide adequate services. The state unemployment rate topped 25 percent, and the burden of aid and services to the jobless was draining public coffers. “Our present tax system is on the verge of collapse,” said M. K. Norton, president of the Washington State Assessor’s Association (Roberts).

Challenges to the Income Tax

Two lawsuits challenged the new income tax law. Thurston County Superior Court Judge D. F. Wright consolidated them, declaring the law “unconstitutional.” Wright’s ruling was appealed to the Washington State Supreme Court, which upheld it. The majority decision interpreted income as property and said an income tax would violate the state constitution’s taxation equality requirement.

In response the State Legislature passed a bill authorizing a “temporary” business-and-occupation tax. This tax on "gross receipts" (not profits) of businesses became permanent.


Phil Roberts, A Penny for the Governor, a Dollar for Uncle Sam (Seattle: University of Washington Press, 2002); Alfred Harsch, "The Washington Tax System -- How It Grew," Washington Law Review, Vol. 59 (January 1965); "Tax Alternatives for Washington State: A Report to the Legislature Prepared Pursuant to Chapter 7, Section 138, Laws of 2001, by the Washington State Tax Structure Committee, William H. Gates Sr., Chair" (The Gates Report), 2002; Washington Tax History, Washington State Department of Revenue, 2004.

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