Freedom Foundation

Court Hears Why Seattle’s Income Tax Is Illegal, Unconstitutional

SEATTLE, Wash. – A King County Superior Court judge on Friday heard arguments for and against but ultimately issued no ruling on the city of Seattle’s proposed graduated income tax scheme.

The case was filed this past summer by the Freedom Foundation and the Seattle law firm Lane Powell, PC, on behalf of 20 city residents after the Seattle City Council approved an income tax that would target high earners.

Judge John R. Ruhl indicated he might issue a ruling prior to Thanksgiving, but nearly everyone agrees the case will ultimately be decided by the Washington State Supreme Court.

Ruhl’s decision will, however, give the victorious side the early bragging rights while setting the legal agenda for the inevitable appeals.

“This is a hugely important case – not just for Seattle but for the entire state of Washington,” said Freedom Foundation Chief Litigation Counsel David Dewhirst. “What the city council’s attempting to do is both illegal and unconstitutional – and the members know it.”

The Freedom Foundation’s legal team made a comprehensive argument against the tax, which would levy a 2.25 percent tax on individual incomes of more than $250,000 and household incomes of more than $500,000.

They noted Washington cities lack plenary taxing authority and only have what taxing authority the state Legislature has granted them. The city’s statutory authority to license for revenue does not extend to income tax. The tax is not authorized by the statutes that authorize cities to tax and, to the contrary, it’s expressly prohibited by statute.

Even more fundamentally, the Washington State Constitution is unequivocal in its equal protection clause, which states that taxes must be uniformly applied. The whole point of the Seattle tax, however, is to punish the wealthy.

Moreover, those behind the tax understand full well its legal and constitutional failings. But the council approved it anyway – leaving city’s taxpayers on the hook for the inevitable court challenge – in order to establish a legal precedent that can be used to impose a similarly progressive income tax at the state level.

“It’s easy to say this is a local issue, but it has ominous implications for the entire state,” said Freedom Foundation CEO Tom McCabe. “Washingtonians have expressed repeatedly and emphatically their opposition to income taxes of any kind. That’s why income tax supporters, rather than going to the Legislature or directly to the voters, are trying to sneak this in the back door through the courts.”

McCabe said he was hopeful judges and justices at every level would reject Seattle’s flimsy arguments, and he criticized the city council members for putting the courts in awkward position.

“In a very real sense,” he said, “the city is trying to force the courts – most notably the Washington State Supreme Court – to be its accomplice. The council members may be the ones breaking the law, but they fully expect the state’s highest court to drive the getaway car.”

The Freedom Foundation is a member-supported, Northwest-based think and action tank promoting individual liberty, free enterprise and limited, accountable government.

David Dewhirst, Chief Litigation Counsel
(360) 956-3482