Mayor Jenny Durkan thinks a city income tax is a “longshot.” Seattle’s measure calls for a 2.25% tax on total income above $250,000 for individuals and above $500,000 for married couples filing together.
New Mayor Jenny Durkan thinks she wants Seattle to appeal a recent ruling against the city’s income tax. But she’s consulting with City Attorney Pete Holmes first and believes the case is a “longshot,” she said Thursday.
Durkan’s comments came during a Facebook Live session with The Seattle Times, as she answered reader questions on video.
Passed by the City Council in July and signed into law by then-Mayor Ed Murray, Seattle’s measure calls for a 2.25 percent tax on total income above $250,000 for individuals and above $500,000 for married couples filing together. The city estimates it would raise about $140 million a year.
The so-called “wealth tax” was immediately challenged by private citizens and organizations, including the Olympia-based Freedom Foundation.
King County Superior Court Judge John Ruhl sided with them on Nov. 22, ruling the measure illegal.
At the time, Holmes and then-Mayor Tim Burgess vowed to appeal directly to the state Supreme Court, where proponents of the tax have long expected the case to ultimately be decided. The city has 30 days from Ruhl’s decision in which to file an appeal.
The city attorney — not the mayor — has full supervisory control of all city litigation, according to the city charter.
“When it comes to Washington state, the studies are clear: the wealthiest among us are not paying their fair share,” Holmes and Burgess said in a statement after Ruhl’s decision.
“In order to build a more just and equitable society for all, we need a serious overhaul of our state’s tax structure.”
On Thursday, a lawyer for one of the plaintiffs asked Durkan about her stance and reporters relayed the question to the mayor. The mayor said she supports the tax.
“Pete Holmes and I … are set to talk, so I can understand the ruling and what his advice is,” Durkan said. “I think Judge Ruhl made the decision he made, but we won’t know the final decision on this case until the Supreme Court rules.”
She added, “It’s my view, I think it should be appealed, because I think a Superior Court judge is never in the position to really decide what the law for the whole state should be.”
Durkan pointed to a recent ruling that upheld a Seattle tax on ammunition (and gun) sales, saying “there could be a softening on what the Supreme Court’s view is on cities’ ability to levy taxes.”
In his decision on Seattle’s wealth tax, Ruhl pointed out that state law explicitly prohibits taxes on net income. The city argued that the tax would apply to “total income,” rather than net. But the judge disagreed.
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Ruhl didn’t rule on whether Seattle’s tax violates a provision in the state constitution requiring property taxes to be imposed uniformly.
“I think it’s a longshot,” Durkan said Thursday. “I think that, under the current state of the law, that both the state law that prohibits cities from imposing income taxes as well as the constitutional provision will strike down our income-tax law. But I think we have to find the answer to it.”
In a statement Friday, a think-tank leader who helped develop the city’s income tax expressed confidence.
“We believe that Seattle has a very strong legal case,” said John Burbank, executive director of the Economic Opportunity Institute.
“We believe that the city has put together the legal rationale, justification and precedents for the Supreme Court to uphold Seattle’s income-tax ordinance, just as it did with Seattle’s gun and ammunition ordinance.”
Seattle is paying an outside law firm up to $250,000 to fight the legal battle over its income tax. Proponents say their goal is to eliminate an overreliance on sales taxes.
Washington state’s tax system has been called the most regressive in the country, meaning that low-income people pay a much higher percentage of their earnings than high-income residents.
“I’m going to talk to my lawyer first,” Durkan concluded, referring to Holmes. “What are our chances? What’s it going to cost? And then, once we have that information, consult with the City Council as well and make a decision moving forward.”
This story was corrected on Dec. 2. The original version gave the wrong name for the Economic Opportunity Institute.