The Washington Research Council has released an analysis of the Seattle income tax court challenge. As we wrote earlier, King County Superior Court Judge John R. Ruhl found the city’s income tax illegal under state law in late November. The city has appealed the decision.
The WRC summarizes the arguments made against the city’s income tax ordinance.
In briefs to the court, the plaintiffs presented three key arguments as to why the ordinance should be declared to be void:
1) Cities only have authority to impose such taxes as they are specifically authorized by the Legislature to impose . There is no legislative authorization for the tax the city adopted.
2) Cities are explicitly prohibited by statute from imposing a tax on net income. The tax the city adopted is a tax on net income.
3) The income tax is a property tax that violates the constitutional require- ment that taxes on property be uniform and the constitutional 1 percent rate limitation.
Ruhl concluded that the first two arguments (the tax is not authorized and it is a prohibited net income tax) are valid and on these bases declared the ordinance to be void. Having invalidated the ordinance on statutory grounds, Judge Ruhl found it unnecessary to consider the constitutional argument.
As we noted at the time, the court’s definitive decision came swiftly. Ruhl left no doubt that the income tax violated clear statutory prohibitions. The WRC brief notes that Seattle Mayor Jenny Durkan has called the appeal a “longshot.”
On December 8, 2017, the day the city filed its appeal, the Seattle Times editorial board wrote,
Seattle should abandon its costly and wrongheaded pursuit of an illegal income tax.
A judge last month eviscerated the city’s legal justification of the high-earners income tax, affirming that cities in Washington have no authority to impose income taxes.
Seattle officials should not appeal. The city cannot afford such political vanity as long as it has broken sidewalks, underfunded social and police services, a backlog of park maintenance, and libraries that aren’t open regular hours.
The WRC adds,
Beginning the new year without the distraction and unnecessary cost of a quixotic pursuit of a municipal income tax would send a positive message about the city’s policy priorities. There is, after all, a well-established process for changing the state constitution and state statute. It requires legislative action and voter approval; that is, the power of persuasion.
Of course, the voters have shown a persistent unwillingness to be persuaded. But that’s another matter.