By: Zack Duvall
Seattle’s City Council unanimously passed a new City tax on top earners in the city with a vote of 9-0. The new tax will affect single residents who earn more than $250,000 a year and married households who earn $500,000 a year jointly at a 2.25% rate.
The city tax, that will likely be the subject of various lawsuits for violating state law, is expected to add roughly $140 million worth of new revenue to city coffers annually and impacts an estimated 20,000 city residents.
Washington state law prohibits any county or city from levying taxes from what is called “net income”. However, the state law fails to outline or define what is meant by “net income”, a loophole that has Seattle Mayor, Ed Murray, confident the city can win any potential legal action.
Murray has been a vocal supporter of ridding the city tax code of what he has called “regressive” taxes on sales transactions and property since taking office.
“Our goal is to replace our regressive tax system with a new formula for fairness, while ensuring Seattle stands up to President Trump’s austere budget tat cuts transportation, affordable housing, healthcare, and social services.” the Seattle Mayor said in an email after the City Council vote was confirmed.
Critics of the new tax say it’s not just that it unfairly targets the city’s most successful residents, but that the law itself is a violation of long standing Washington state tax law.
“There’s something fundamentally wrong with elected officials passing a tax they know is against the state law and the constitution with the hope of being sued and having a judge overturn it.” Jason Mercier, a director at the Conservative Washington Policy Center, told reporters during a news conference addressing the new tax.
Critics of the new tax further attack it by calling it a partisan effort that only came about after the group, Trump Proof Seattle, started demonstrations calling for such an effort on the part of city leaders.
Washington state is one of only seven in the country that does not have a tax on personal income, with no city in the state having such a tax.
Last year, voters in Olympia, the state capitol, overwhelmingly rejected a proposed tax similar to the one passed in Seattle.