Seattle income tax case inches toward Washington Supreme Court

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A controversial decision from an appeals court could blaze a trail for an income tax in Washington. (Photo by Chris Hondros/Getty Images)

Seattle’s income tax case continues to inch its way forward, with the city officially putting in its request to have it heard before the Washington State Supreme Court.

Diving into Seattle’s case for an income tax

In 2017, the Seattle City Council passed a 2.25 percent tax on personal income over $250,000 dollars. The money was supposed to go to a variety of public services. It was overturned in court, and the city has been fighting the battle ever since.

“We already know that the state of Washington has the most regressive tax structure in the entire country,” said Seattle City Attorney Pete Holmes.

Back in July, the Washington State Court of Appeals handed down a shocking decision, ruling that the City of Seattle has the legal authority to impose an income tax, provided it’s uniform across all tax brackets.

In early November, an appeals court rejected a request to take a second look at its ruling.

That left the door open for a showdown in Washington’s Supreme Court, where a few different things will need to be decided:

  • Whether a tax on high-earners Seattle approved in 2018 can be implemented at all
  • Whether the appeal’s court decision allowing a uniform tax across all earners is Constitutional
  • Whether income qualifies as property

The City of Seattle is hoping to see a 90-year-old legal precedent that labels income as property overturned, something that’s been a major roadblock toward levying an income tax anywhere in Washington state.

Opinion: History of Washington’s income tax shows why we need it

Opposing the city’s case is the Pacific Legal Foundation, which cites past defeats of an income tax in Washington state.

“(Seattle’s) precise argument has gone to the state Supreme Court seven times already, and has been found to be unconstitutional all seven times,” said the PLF’s Brian Hodges.

While the city sees an income tax as a way to provide a more equitable system for everyone, Hodges and the PLF view the issue as one of constitutionality.

“This case represents a purposeful violation of the constitution,” he said.

In the days ahead, the city and the PLF will wait in a holding pattern — there’s no deadline for the state Supreme Court to decide on whether to hear the case.