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Seattle imposes first ever income tax for only wealthy residents, expects expensive legal challenge

July 11, 2017 | | Print Article

“Economic justice” is the way in which it was described by one of the measure’s co-sponsors.

The city of Seattle voted to enact the first ever income tax in any jurisdiction within the state of Washington. And it targets only high -income earners.

The city council members unanimously approved 9-0 the measure, which would tax single taxpayers earning above $250,000, and married taxpayers earning above $500,000 at the rate of 2.25 percent.

The claim is that the tax will raise $140 million per year without the necessity of raising property taxes — but such estimates have a way of being disproved as high-income earners inevitably take measures to avoid the tax altogether.

The measure is expected to face a court challenge from its opponents, who call it illegal and unconstitutional. They also predict that if the tax stands, the 2.25 percentage rate would only be the beginning — it would likely mushroom from there.

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The council is “going to unanimously adopt an illegal income tax that has no hope of taking effect and will waste taxpayer resources on litigation the city is sure to lose,” said Jason Mercier, director of the center for government reform with the Washington Policy Center, according to The Associated Press.

A 1984 state law prohibits any county or municipality from levying an income tax upon net income. The measure that Seattle approved, however, sought to get around this by levying taxes upon the gross income of its residents.

Proponents of the tax say it addresses income disparity within the city.

“We have an increasing affordability gap between the have and have nots. The middle class is being squeezed as well. And one of the reasons is our outdated, regressive and unfair tax structure,” said Councilmember Lisa Herbold, who co-sponsored the measure.

“This is a big step forward in Seattle but it’s also hopefully a big step forward for our state.”

Ed Murray, the city’s mayor, said at a rally Monday prior to the council’s vote, that he fully expects and even looks forward to a court challenge.

“We welcome that legal challenge. We welcome that fight,” he said. He predicted that in the event the city wins that fight, “it won’t just be Seattle that’s doing a progressive income tax.”

Clip via KIRO

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Except for one time in 1932, voters in Washington have repeatedly rejected a state tax on personal income. The 1932 measure was struck down the following year be the state’s supreme court.

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