Split-Roll Taxation is a Wolf in Sheep's Clothing

Property taxes in Washington state have climbed steadily for decades, and it is no wonder – property values soar year after year and are only going up. In the 2021 legislative session, taxation was at the forefront of most conversations here at WBPA. This included Capital Gains, Tax Increment Financing, and the Multi-Family Tax Exemption, to name a few. However, there were very few protections from over taxation discussed.

As WBPA looks ahead to the 2022 legislative session, we anticipate doing significant work on a proposed split-roll property tax, named the “Anti-Displacement Property Tax Exemption.” This proposed legislation would give homeowners up to a $250,000 break on the assessed valuation of their primary residences. Sounds good, right? Except this would only benefit a small segment of Washingtonians.

Split-roll taxation has historically overburdened those at the ends of the spectrum: those who own property for commercial and residential business, and middle- to low-income families and individuals who rent their homes. With over a third of Washingtonians living in rental housing, a “protection” that ensures higher taxes for this section of residents is hardly a benefit.

Furthermore, a split-roll tax is unconstitutional in Washington state. Split-roll taxation “splits” the tax roll in to two or more segments, each of which are taxed at a different rate. For example, an apartment building is taxed at a higher rate than a single-family home that is used as the owner’s primary residence. This cost is passed on to residents of the apartment building in their monthly rent. In Washington, this type of distinction is specifically prohibited to protect large and small businesses, and renters alike. A change to this portion of Washington State’s Constitution opens the door to tax revisions that could devastate commercial and residential property owners while removing much needed rental units from an already over-strained housing market.

Vacancy rates are plummeting as the need for affordable housing skyrockets. Further burdening the groups who both supply and demand rental housing is a disastrous proposal. In the end, low- and middle-income renters will feel split-roll’s pinch more than any other group as rental rates continue to climb to cover unequal and unfair taxation. You cannot simply turn the dial on taxes down for one small segment of the population without expecting to encumber the rest of the state with higher taxes to cover the lost income. 

WBPA members and partners are encouraged to consider this proposed legislation, and the lawmakers who will oppose it, as they head to the ballot box this November. Casting a vote for a moderate candidate could mean the difference between a fair, equal tax policy, and a discriminatory “protection” that benefits only a few.