When last we tuned in, the state Supreme Court had declined direct review of the City of Seattle’s controversial municipal income tax. That was back in January. The next stop, then, would be the Court of Appeals. The January story in the Seattle Times laid out the agenda.
…City Attorney Pete Holmes said the city wouldn’t be giving up.
“While we felt the state Supreme Court was the most appropriate forum to address the constitutional issues we hope to resolve in this case, we’re happy to first take our arguments to the Court of Appeals,” Holmes said.
“Whatever the outcome at the appellate court, either side will have the opportunity to petition our state Supreme Court for appeal.”
The Court of Appeals heard the arguments last week. From the reports we’ve read, the city is likely to be bucking the tide again. SCC Insight, written and managed by Kevin Schofield., has a detailed breakdown of the hearing in a post headlined SEATTLE HAS A ROUGH DAY IN COURT DEFENDING ITS INCOME TAX.. It’s worth reading for the play-by-play and clear discussion of the legal principles involved. A couple of summary takeaways:
While some of the statutory questions are debatable, the judges left little doubt that if they were to find for the city on all of the statutory issues and reach the constitutional one, they would need to apply stare decisis and rule against the city on that basis. Probably the strongest argument the city has is that the law prohibiting a net-income tax violates the single-subject rule (and even that is far from a slam-dunk; the trial court judge didn’t buy it). But even if the judges rule in the city’s favor on that issue, they are still likely to lose on the issue of whether the city has explicit authority from the state to impose an income tax on individuals’ income. So the chances of the appeals court reaching the constitutional issues remains low…
It’s unclear how quickly the Appeals Court will rule on this case. If it ignores the priciple of constitutional avoidance, it could turn it around quickly and, as Judge Verellen suggested, write a short opinion citing stare decisis and the binding Supreme Court precedent. On the other hand, if it decides to plow through all the statutory issues, it could be months. There are no timetables for Appeals Court decisions. And no matter how it rules, the losing side will appeal it back to the state Supreme Court, so don’t expect a final resolution until 2020.
In Crosscut, David Kroman covers the hearing:
The case hinges on two questions: Would the tax be legal under laws previously set by the state Legislature, and would the tax be legal under the state’s constitution? For decades, the answer to both questions has widely been accepted as “no,” but the city, in a Hail Mary effort, is hoping to change that.
Doing so will require something of an uphill battle.
In Thursday’s hearing, Judge James Verellan questioned why the Court of Appeals should even listen to arguments when only the Supreme Court can overrule its own precedent.
Kroman writes that the city continues to claim the income tax isn’t an income tax. (Really.)
Lawrence and Claire Torney, an attorney for the Economic Opportunity Institute, made several arguments in favor of the tax. First, that the income tax was not really an income tax — and was in fact closer to the sorts of taxes imposed on businesses or in local improvement districts, where taxes are imposed in exchange for some specific benefit.
The plaintiffs appear to have the stronger argument.
Rob McKenna, attorney for the plaintiffs, said any argument that the tax was something other than an income tax was false, as evidenced by the language of the 2017 law and the accompanying campaign, which explicitly referred to it as an “income tax.” Additionally, he argued that state law was not conflicted: When the 1984 law was passed, he said, legislators were clear they were banning cities like Seattle from imposing an income tax.
Jason Mercier with the Washington Policy Center posts his notes from the hearing. The final comment:
Hard to judge based on oral arguments but I sensed the judges were very skeptical of Seattle’s arguments and feel bound by prior state Supreme Court rulings prohibiting a graduated income tax
We’ll see. Maybe soon. Maybe later.