A ruling Wednesday in King County Superior Court confirmed what most observers already believed: Seattle’s proposed income tax upon high earners violates the state constitution. Equally notable, voters across the state have said numerous times that they have no interest in establishing an income tax.
In other words, the Seattle City Council earlier this year undertook a wasteful and time-consuming action that belies the wishes of voters. While the state’s tax system does, indeed, need some tweaking, unilateral action by leaders in the state’s largest city is counterproductive.
In July, the Seattle City Council unanimously voted to impose a 2.25 percent tax on income above $250,000 for individuals and above $500,000 for married couples filing joint returns. Officials estimate that would raise about $140 million a year to lower property taxes, help create affordable housing, and help pay for city services.
There are several problems with this, one of them being that such a tax is not authorized under state law. Another issue is that a 1984 law prohibits a local municipality from levying a tax upon net income, which Seattle officials tried to skirt by arguing that their tax is not upon “net” income. Perhaps most important, voters have rejected numerous ballot measures over the years that would create a statewide income tax; most recently, a 2010 measure was rejected in all 39 counties, including with 55 percent of the vote in King County.
Following last week’s ruling by Judge John R. Ruhl, state Rep. Brandon Vick, R-Vancouver, said: “I hope this sends a clear message to Seattle politicians that it is time to listen to the will of the voters. I am hopeful this latest court ruling will deter local governments from using the courts to circumvent the legislative process.”
But Seattle officials are undaunted. They say they will appeal the ruling with hopes of sparking discussion about Washington’s tax system.
That is a discussion that must be held. Washington is one of seven states without an income tax, and the reliance upon sales tax and property tax to fund government functions has led the state’s tax structure to be called the most regressive in the nation. A 2015 study by the Institute on Taxation and Policy determined: “Washington state has, by far, the U.S.’s most regressive state tax system, taxing the poorest residents at 16.8 percent while taxing the top 1 percent at only 2.4 percent.”
The notion of what is “fair” when it comes to taxes is inherently in the eye of the beholder. Nobody likes to pay higher taxes, and funding government services requires a tricky balancing act. According to WalletHub.com, Washington ranks 33rd in terms of state and local tax burden for residents. Being near the middle of that ranking seems to be a reasonable compromise, but it does not answer the question about equity and the regressive nature of the state’s taxes. A capital gains tax or a tax upon carbon emissions, both long supported by Gov. Jay Inslee but rejected by Republicans in the Legislature, would be a wise place to begin addressing those inequities.
While discussion about changes to taxes in Washington is warranted, the approach of the Seattle City Council should be rejected. The concern, obviously, is that if a local income tax is allowed there, other cities and counties would be quick to dip into that trough.
When it comes to paying for government services, there are better methods than one that has been rejected by voters several times.