Seattle Resolution Proposes Income Tax on Wealthy

A proposed income tax on the highest earners in Seattle could move forward to a vote this summer. A resolution sponsored by Council member Lisa Herbold this week aims for a vote by July.

The income tax idea has been getting a lot of attention since last week, when Seattle Mayor Ed Murray voiced support for it at a mayoral candidates forum.  But a cohort of local progressive groups (working under a banner labeled “Trump proof Seattle”) says they’ve been working on the plan since January.

“Before that day, we did not know [the mayor] was on board with this proposal,” said Katie Wilson of the Transit Riders Union. “We had been reaching out to his office. We’re thrilled that he’s taking up the banner.”

Wilson noted that Council member Herbold has taken the lead on the initiative. Her draft resolution cites the “Trump Proof Seattle” coalition’s specific proposal of a 1.5% tax on income over $250,000 per year.

“What we’re proposing is to tax only income in excess of that threshold. So for instance, if you make $251,000 a year, you’d only be taxed on that $1,000,” Wilson explained. “We estimate that that will raise over $125 million a year in the City of Seattle.”

Wilson feels it’s premature to discuss how she the money might be used if the plan goes through. But advocates anticupate an intense court battle first.

“We expect it to be challenged. If that legal process is expedited, we hope it could get to the Supreme Court in a year and a half,” she said.

Critics expect a lengthier fight. At issue is the uniformity provision in the Washington state constitution, which states “taxes need to be uniform upon the same class of property.”

Since the 1930s, the court has ruled that income is property, meaning the city’s plan wouldn’t be illegal unless the State Supreme Court reinterprets the law.

Both supporters and opponents recognize that Washington has a broad definition of property, as defined under current law.

“The word ‘property’ as used herein shall mean and include everything, whether tangible or intangible, subject to ownership,” reads Article VII of the state constitution.

“We need an answer from the court,” said Mayor Murray Saturday. “Is this legal? Is it constitutional? Because otherwise, we are not going to be able to take care of our needs in education, transportation, homelessness.”

The Mayor’s Office said he’s now working with Council member Herbold on moving the city legislation through the next steps. Seattle City Council could may hold a hearing to consider the ordinance as early as Monday, when they would establish a timeline.

Supporters are hopeful that the ordinance will move to a vote as early as July. If it passes, there’s little question that it will be challenged, eventually becoming a “test case” for Washington state courts.

“It would be groundbreaking,” Wilson said. “Not only would Seattle have this new progressive revenue source, but we’d be opening the way for other municipalities in Washington state to do the same thing and also building momentum for statewide tax reform.

Outspoken critics of the city’s plan, so far, include the Washington Policy Center.

“As a general policy, Washington Policy Center opposes imposing a state or local income tax because it would deprive Washington of one of the few economic advantages we have compared to other states,” Paul Guppy of the Washington Policy Center said.

Opponents also cite a state statute that prohibits cities and counties from implementing taxes on net income. Wilson responded that her proposal doesn’t conflict with that statute since it’s a tax on “adjusted gross income.”

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