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Press Release - Freedom Foundation Teams Up With Lane Powell To Challenge Seattle Income Tax

Press Release - Freedom Foundation Teams Up With Lane Powell To Challenge Seattle Income Tax

August 9, 2017

SEATTLE, Wash. – The Freedom Foundation, working in partnership with top-rated tax experts from the Seattle law firm of Lane Powell, PC, on Wednesday delivered on its promise to file a lawsuit seeking to invalidate the targeted and illegal income tax approved on July 10 by the Seattle City Council.

The suit, filed in King County Superior Court on behalf of more than a dozen Seattle residents, illuminates various ways the council's tax violates Washington and Seattle laws and the state constitution.

The law – passed unanimously by the council members in early July – is illegal for many reasons. For starters, Washington cities lack the authority to impose these types of taxes.  Moreover, they explicitly may not enact net income taxes. This tax also violates Seattle's charter because this issue should have been decided directly by the people. These statutory and charter violations must be addressed well before any court gets to the several constitutional problems with the law.

"This tax ordinance's legal and constitutional infirmities are patently obvious," said David Dewhirst, litigation counsel for the Freedom Foundation – an Olympia-based policy organization with a long history of opposing tax increases. "That's what makes this whole thing so chilling. The council knowingly adopted a law that can only survive if the courts abandon decades of precedent – precedent grounded in Washington's fundamental commitment to legal equality. The Council apparently believes they're not answerable to the law or the repeatedly expressed will of the voters."

"This is clearly bad policy and illegal, but it's also an assault on the rule of law," he said. "If they can get away with it this time, where does it stop?"

Supporters of the plan, which would levy a 2.25% tax on total annual income for individuals earning more than $250,000 and $500,000 for couples filing jointly, says it's needed to address income equality, but Dewhirst says the whole concept is hypocritical.

"How do you promote equality by creating a law that, by definition, institutionalizes inequality?" he asked. "Washington's constitutional framers understood this threat, and that's why they explicitly disallowed taxation schemes that target and punish specific groups of residents."

"In America, no one is above the law, including the Seattle City Council," added Lane Powell attorney Scott Edwards. "We are confident the independent judiciary will uphold the law and invalidate this illegal tax."

"In the meantime," he continued, "the city's taxpayers will have to pay the legal bills to defend the indefensible."

Income taxes have been proposed in various forms around the state for many years, and voters have repeatedly rejected them. Most recently, residents of Olympia were asked last November to tax its higher-earners to fund higher education scholarships for needy students.

The measure was defeated handily.

Proponents of the Seattle tax, including some Council members, hope this will be the first step in introducing a statewide income tax.

 "Seattle's tax is bad enough, but an illegal, unconstitutional, statewide income tax would be much worse," Dewhirst said. "It needs to be stopped now. And we're determined to do just that."

For questions and inquiries, contact David Dewhirst, Freedom Foundation's Litigation Counsel, at DDewhirst@freedomfoundation.com or 360.216.7560.

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