Supreme Court Blocks Seattle from Adequately Taxing Rich

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The states wealthiest residents, including this guy, can breathe yet another sigh of relief.

The state’s wealthiest residents, including this guy, can breathe yet another sigh of relief. ALEX WONG / GETTY IMAGES

On the day Gov. Jay Inslee plans to cut programs to help the poor and the middle class, a majority of the Washington Supreme Court justices refused to consider Seattle’s appeal of a lower court decision that ruled the city’s income tax unconstitutional. The Court doesn’t give reasons for rejecting petitions, so we don’t know why they did that.

The Court’s denial means Seattle’s 2.25% tax on the wealthy, which passed in 2017 and which would have raised $140 million per year, will remain blocked.

But it also means the State Court of Appeals decision stands. “And that decision is a very positive decision,” said John Burbank, executive director of the Economic Opportunity Institute, whose own petition for court review of the income tax decision was rejected today, too.

“It enables municipalities, including the city of Seattle, to levy an income tax within the parameters of the property tax, so no more than 1%. Further, all the exemptions from property taxation could be applied to the income tax as well, effectively making an income tax a progressive tax through which the affluent contribute to the welfare of the city.”

“With this decision we still have not cracked the nut that was given to us in the 1933 decision invalidating a progressive income tax that was voted for by over 70% of the people in 1932,” Burbank added. “And that decision was based on a faulty reading of law, and a faulty understanding of the difference between income and property. Unfortunately we still have to live with that decision, but the cities do have the ability now to put in place an income tax.”

In lieu of me explaining more about the historical background on that old court decision, let’s roll the tape from this helpful KUOW explainer:

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Anyhow, now it’s up to city councils across Washington to decide if they want to do the right thing and pursue 1% income taxes with exemptions for the poor in order to boost public funding for services ahead of another Great Depression. I’ve asked Seattle’s council members for comment on that, and I’ll update the post when I hear back.

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In a statement, Seattle City Attorney Pete Holmes said the Court’s decision “could not have come at a worse time,” presumably referring to the global economic downturn that disproportionally burdens low-income families, but added that his “attorneys stand ready to advise policymakers in exploring all possible options available under that decision,” again, presumably with regard to the possibility of implementing some kind of flat tax.

In her statement, Mayor Jenny Durkan said, “Seattle has the authority to adopt an income tax, and I believe we can craft a proposal that can help make our tax system less regressive.”

In meantime, Washington will retain its national title as the state with the highest tax burden on the poor and middle class. Right now, low-wage earners in Washington pay nearly 18% of their income in taxes. Meanwhile, the top one percent in Washington—people making more than $546,000 per year—are only paying 3% of their income in taxes.

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