State appeals court rules Seattle income tax unconstitutional | KNKX

State appeals court rules Seattle income tax unconstitutional

Jul 16, 2019

The Washington Court of Appeals has declared a Seattle tax on wealthy households is unconstitutional. The city passed the income tax on high earners in 2017, but it hasn't gone into effect because of court challenges.

The appeals court says the tax violates the Washington constitution. But, the court also says a 1984 state law that banned cities from enacting taxes on net income is unconstitutional. Proponents say that gives them hope the Washington Supreme Court will ultimately rule the Seattle tax constitutional.

The city income tax of 2.25 percent only would apply to people with income above $250,000. The Washington appeals court says Seattle's income tax violates the provision of the state's constitution that says property — and income is considered property — must be taxed uniformly.

However, in another part of the ruling, the appeals court said a state law that bans cities from taxing net income is unconstitutional. Seattle leaders say that means the city does have authority to enact an income tax, and they plan to appeal their case to the state Supreme Court.

John Burbank, executive director of the Economic Opportunity Institute, says not all states consider income property; he's hopeful the Washington Supreme Court will revisit rulings in the state that labeled it as such. That decision dates back to the 1930s, Burbank says, and the court and the times have changed.

Burbank's institute has intervened on behalf of the city. He says the ruling is a win because it makes it easier for the state Supreme Court to rule in favor of Seattle's tax.

"And in that way create a robust and progressive funding stream and actually reduce taxes on low-income and working-class people in our city," he said.