With Eye on Revolutionizing Tax Code, Seattle City Council Passes Income Tax on Rich

With Eye on Revolutionizing Tax Code, Seattle City Council Passes Income Tax on Rich

The council unanimously approved a 2.25 percent tax that only applies to income over $250,000 yearly.

The Seattle City Council Monday unanimously approved a 2.25 percent tax on income above $250,000 per year for individuals or above $500,000 per year for couples who file federal taxes together. If the tax withstands inevitable court challenge, it has the potential to revolutionize Washington’s regressive tax system.

The tax will raise an estimated $140 million per year. That money is earmarked for cutting other, regressive taxes such as the sales tax and potentially taxes on businesses; backfilling potential federal funding cuts; and financing city projects including housing, education, transit, green job creation, carbon reduction, and administration of the tax.

The tax does not apply to anyone who earns less than $250,000 per year, and only applies to income above that threshold. For example, a person earning $249,000 per year would pay zero income tax, while a person earning $251,000 per year would pay tax only on their last $1,000.

In Washington, conventional wisdom holds that income taxes are illegal. However, some legal scholars dispute that the state Supreme Court has a clear precedent on this question. Seattle’s income tax is intended in part to test its own legality. A cornerstone of the drafting process for the income tax bill, according to sponsoring Councilmember Lisa Herbold, was writing so as to pass constitutional muster.

City Attorney Pete Holmes was lukewarm about the tax’s legal chances in a press release from City Council. “I recognize there may be challenges, but as your City Attorney I know we have assembled an outstanding legal team to craft the best legislation possible and defend it,” he said.

“Seattle is a progressive city, but you wouldn’t know it by looking at our regressive tax structure, and that includes the taxes paid by small businesses,” said Councilmember Lisa Herbold, who co-sponsored the legislation with Kshama Sawant, according to the release. “When our poorest households are paying 16% of their income in state and local taxes while our highest earners are paying only 2.4%, we have a very clear problem. Today we are taking a step in the right direction, toward tax fairness.”

“We live in a deeply unequal society,” said Sawant in the release. “Throughout history, it has been mass movements of ordinary workers and young people, not the political representatives of big business, that have won change. Since I first ran for office, Socialist Alternative and I have organized for a $15 minimum wage, taxing the rich, and rent control. Our growing movement has now won $15 and taxing the rich. We can continue organizing to win not only rent control, but a world free of exploitation and oppression.”

The income tax is scheduled to take effect the first day of 2018, with collection beginning in 2019 during federal tax filing season in April. According to the release, the Department of Finance and Administrative Services will go though a rulemaking process for how to administer and implement the tax, due to be finalized by November 15, 2018.

cjaywork@seattleweekly.com




Talk to us

Please share your story tips by emailing editor@seattleweekly.com.

More in News & Comment

The Monroe Correctional Complex on April 9, 2020. (Sound Publishing file photo)
Formerly incarcerated people regain right to vote in Washington

Rights restored immediately upon release.

Puget Sound renters will need housing assistance
Puget Sound renters will need housing assistance

Nonprofits, activists are expecting greater need as workers are laid off.

Spring Chinook Salmon. Photo courtesy Michael Humling, US Fish & Wildlife Service
Salmon update: King County wants cleaner water, more habitat

Salmon and orcas are in the spotlight once again as King County… Continue reading

Guns seized during April 7 arrests (photo credit: Dept. of Justice)
More than 20 arrested across the Puget Sound in drug distribution conspiracy

DOJ says law enforcement agencies seized over 70 guns and hundreds of thousands in cash.

T
Sheriff’s office wants help identifying Green River killer victim

Staff reports In 2003, Gary Ridgway, Washington’s notorious Green River killer, pleaded… Continue reading

King County Prosecutor Dan Satterberg. File photo
King County needs more lawyers to attack backlog of cases

6,107 open cases is double the normal amount for King County Prosecuting Attorney’s Office.

Public Health – Seattle & King County staff administering COVID-19 vaccine to a local emergency responder. COURTESY PHOTO, Public Health-Seattle & King County
Starting April 15, everyone 16 and older is eligible for a vaccine

Gov. Inslee said an expected increase in vaccine supply enables the state to open eligibility.

A CVS pharmacist prepares a COVID-19 vaccine at Village Green Retirement Campus in Federal Way on Jan. 26. Olivia Sullivan/Sound Publishing
Phase Finder for vaccine eligibility to be eliminated March 31

Eligibility verification via Phase Finder no longer required for appointments, vaccinations beginning this week.

Courtesy photo
Issaquah School District settles negligence lawsuit for $4.25 million

The lawsuit alleged the district covered for a now-convicted child molester while he was a teacher.

Sound Publishing file photo
More people can get the COVID vaccine on March 31, but supply is still limited

The number of people eligible to receive a COVID-19 vaccine is set… Continue reading

Kindergarten and first grade students line up outside of Panther Lake Elementary in Federal Way on March 15. Olivia Sullivan/the Mirror
Inslee: K-12 schools can reduce COVID social distancing

The governor reduced social distancing requirements for K-12 classrooms from 6 feet to 3 feet.

Washington Insurance Commissioner Mike Kreidler. (Wikimedia Commons)
Insurers told to stop using credit scores to set rates

A ban of that practice will be in place until the pandemic is over, Insurance Commissioner Mike Kreidler says.