All along, a sense of statutory manipulation has driven the city of Seattle’s effort to impose an income tax on city residents. The Seattle City Council passed it unanimously in July, and then-Mayor Ed Murray signed it into law, knowing full well that past state Supreme Courts have found that an income tax violates the state constitution. Proponents knew the tax would draw a court challenge, but their hope was that sympathetic judges would employ a supple reading of the law and uphold their action.
And the day before Thanksgiving, in what is likely to be the first round of legal wrangling, the ploy gained neither judicial sympathy nor suppleness — as well it shouldn’t.
King County Superior Court judge John R. Ruhl last week ruled against Seattle’s imposition of a 2.25 percent tax on total income above $250,000 for individuals and above $500,000 for married couples filing together.
For more than 80 years now, the state Supreme Court has ruled that income is property, and that state law prohibits taxes on net income. On top of that, a local government must have express authorization from the Legislature to impose any type of tax — the Legislature has not done so for an income tax. The court also has held that a graduated income tax runs afoul of state law that property must be taxed uniformly.
So it was no surprise when Judge Ruhl cited legal precedents last week in deeming the tax to be illegal. The city had argued semantics in saying that it imposed an excise tax that would apply to “total income” — Ruhl essentially said that whatever it was called, it is an income tax. The judge also ruled that the city did not have the authority to approve the tax. He did not rule on whether the Seattle effort violates state law on uniform taxation.
Income tax supporters argue that the state’s reliance on sales and property taxes makes Washington’s among the most regressive in the country — that an undue tax burden falls on lower-income residents. They have a number of studies that support their view, but the state has a process already in place to address that issue.
The process is a constitutional amendment, which requires approval by both the Legislature and the electorate. Income tax supporters are frustrated because the amendment route has been tried before for a graduated income tax — five times, most recently in 1973 — and each time the voters have voted it down. The voters also have rejected four income tax ballot initiatives — by a near 2-1 ratio in 2010, the most recent vote. If the process doesn’t work for them, then supporters need to alter the specifics of their policy or the message — or to accept that a landslide majority of state voters simply don’t want an income tax.
Meanwhile, Seattle probably will continue its end run through the courts. Judge Ruhl’s ruling likely will be appealed, and it likely will land in the state Supreme Court, where it should be an easy legal call for the nine justices to rule the way Judge Ruhl did.