Freedom Foundation

Seattle Income Tax Fails Its First Test Of Legality

SEATTLE, Wash. – A King County Superior Court judge on Wednesday agreed with the Freedom Foundation that Seattle’s scheme to impose a redistributionist income tax on the city’s high earners violates state law.

Unfortunately, instead of conceding defeat, the city will almost certainly waste more of the taxpayers’ money appealing the ruling – to the Washington State Supreme Court, if necessary.

“The Seattle City Council knew when it first passed this last summer that taxes in this state have to be applied uniformly,” said Tom McCabe, CEO of the Freedom Foundation, an Olympia-based free-market think and action tank that joined forces with the Seattle law firm Lane Powell, P.C., to file a lawsuit challenging the tax.

Arguments were heard in the case on Nov. 17 and Superior Court Judge John R. Ruhl delivered on his promise of a ruling before Thanksgiving.

Washington statutory law and the state Constitution, McCabe explained, both prohibit tax plans that impose one rate on lower-income individuals and a higher rate for those with more money – which Seattle’s does.

“And that’s not an unintended consequence,” McCabe said. “It’s the defining characteristic of the Seattle plan. The whole idea is to punish those who’ve been successful by confiscating their wealth and giving it to the perceived victims of that success.”

McCabe said the Seattle City Council members understood full well the flaws in their tax scheme but passed it anyway hoping an activist lower court judge or, ultimately, the Supreme Court justices would agree to substitute their liberal agenda for the law.

Superior Court Judge John R. Ruhl was the first to be tested, however, and he sided with the rule of law.

Ruhl’s decision noted, “Regardless of what label one may choose in classifying the city’s tax, the requirement remains that the Legislature must specifically authorize the tax. The city has not identified any specific statutory authorization for its tax.”

“In our system of government, the Legislature makes laws and the courts interpret them,” said Freedom Foundation Chief Litigation Counsel David Dewhirst. “If you want to change the existing tax laws, you can ask your legislator to introduce a bill, or you can sponsor a ballot initiative. And if you want to amend the Constitution, there’s a process for that, too.

“Their problem is, they’ve tried that and it never works because the voters have consistently rejected income taxes of all kinds,” he said. “So they’re trying a shortcut by asking the courts to legislate from the bench.”

Dewhirst said he was certain Ruhl’s decision wouldn’t be the final word on the subject, since the city’s lawyers have vowed from the start to appeal any ruling that went against them.

“Still, it’s good to see our arguments validated,” he said. “There’s no way to predict what the Supreme Court will decide, but there are numerous court precedents the justices would have to disregard in order to rule in the city’s favor. This adds another important one to the list.”

Dewhirst expressed gratitude to the tax litigation team at Lane Powell who were instrumental in obtaining this excellent ruling.

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