The Hastings Building in Port Townsend. Photo via Wikimedia Commons

Following Seattle’s Lead, Effort Brewing to Pass Income Tax in Port Townsend

Seattle’s law could help other towns access IRS data on residents.

Seattle Weekly caught Tobi McEnerey by phone on her way out the door, as she was wrestling with her kids.

“Sorry to rush off the phone. Two five year olds, unimaginably, didn’t want to go to a housing rally so I could talk about tax structure,” she wrote in a followup email.

McEnerey lives in Port Townsend, and is heading up an effort there to establish an income tax on high-earners.

Sound familiar?

Both sides of Seattle’s income tax debate have framed the new levy on income over $250,000 for individuals and $500,000 for couples as the first step to similar taxes across the state. Opponents frame this as a bad thing (“you’re next!”) Proponents say it’s why Seattle’s law is so important: Seattle could lead the way to more progressive taxing across the state.

As has been widely reported, one way Seattle could lead the way is by successfully defending the income tax law against a slew of legal challenges it now faces; that legal fight has already begun earnest.

But a less noted clause in the law would also allow small cities like Port Townsend to piggyback on Seattle’s law and get residents’ income data from the IRS for taxing purposes. The clause is highlighted in a motion filed on Wednesday by the Economic Opportunity Institute, asking that they be allowed to intervene in the lawsuit challenging Seattle’s income tax law.

”Cities of less than 250,000 residents may access IRS data for their city only by partnering with other cities that have local income taxes and which have a combined population of 250,000 or more,” the motion says. “The ordinance has a provision for Seattle to facilitate such data sharing.”

John Burbank, executive director of the Economic Opportunity Institute, says that the 250,000-population rule was a hurdle in his group’s efforts to pass an income tax by ballot measure in Olympia (the measure did not pass). Since Olympia does not have 250,000 people, the income tax there would have essentially been collected through self-reporting.

“There would have been a certain amount of leakage,” Burbank says, probably understating things.

But if Seattle’s law is upheld and the city gets access to IRS income data, then other towns in Washington could partner with Seattle and get their residents’ income data as well. That would make for a more effective collection of the income tax.

Burbank notes similar agreements are used in suburbs around Cleveland. There, the City of Cleveland operates the Central Collection Agency, which oversees tax collection for 50 “member communities and collects over four hundred million dollars on an annual basis,” according to its website.

EOI, which has been lobbying the Seattle City Council for an income tax on high earners since at least early 2016 and won a $50,000 contract earlier this year to consult on the creation of the ordinance, is asking to intervene in the case so it can argue legal points it says the City of Seattle does not plan to. Specifically, it wants to argue that a state law stating that “a county, city, or city-county shall not levy a tax on net income” is unconstitutional. Among other things, Burbank says they want to argue the statute does not adequately define “net income,” rendering it invalid.

Meanwhile, over in Port Townsend, McEnerey says the city council has “many, many reservations of what this would look like in a small town with an $8 million general fund.” But that’s not dissuading her and others.

“So, we organize. We show council that their folks want this. Given the steep educational component, it is slow going. We have many forums upcoming for the general public and are courting organizational endorsement presently.

“We have high hopes to pass this in PT by early next year.”

dperson@seattleweekly.com

More in News & Comment

Soldiers and civilians at a naturalization ceremony during the 68th Annual Seafair Fleet Week in Seattle on Aug. 4, 2017. Flickr/U.S. Navy photo by Mass Communication Specialist 2nd Class Matthew Dickinson.
Seattle Officials Urge Trump Administration to Address the Naturalization Backlog

The Seattle City Council and Mayor Jenny Durkan have called for a reduction in citizenship application delays.

Hundreds of teachers rally outside of John Stanford Center for Educational Excellence to ask for raises in the upcoming contract with Seattle Public Schools. Photo by Melissa Hellmann
Is a Strike Looming at Seattle Public Schools?

Some educators say they’re ready to stall negotiations to demand competitive wages.

Race For King County Prosecutor Heats Up at Seattle Forum

Former public defender Daron Morris slams incumbent Dan Satterberg for the use of bail in the county justice system

Democratic Socialist to Run Against Rep. Adam Smith in Nov. Election

After coming up short in early results for Aug. 7 primary, Sarah Smith moves into second place

Sparks Continue to Fly Over Safeco Field Maintenance Funding

PFD board member argues that $180 million in public money for stadium upkeep lets Mariners off the hook.

Photo courtesy of The Herald
Death Watch For Killer Whales?

Grieving mother orca shines a spotlight on a serious ecological issue.

Photo by Josh Kelety
City Council Passes Temporary Historic Protection for The Showbox

With a lively crowd on hand, the Council unanimously voted to delay any demolition of the venue by 10 months.

Carmen Best was confirmed as the Seattle Police Chief on Aug. 13. Photo courtesy of the Seattle Police Department.
There’s a New Police Chief In Town

Seattle City Council Confirms Carmen Best as the Chief of the Seattle Police Department

Most Read