Coalition wants to ‘Trump-proof’ Seattle with income tax

The Transit Riders Union, Economic Opportunity Institute and other local organizations are launching a campaign called “Trump Proof Seattle” to start a city income tax on wealthy households.

Transit Riders Union General Secretary Katie Wilson said the campaign is a response to the threat of Seattle’s losing federal funding under President Donald Trump.

But the campaign is also an attempt to test whether an income tax can be allowed under Washington state’s constitution, Wilson said Monday. If Seattle were to adopt such a tax, the measure almost certainly would be challenged in court.

“We’re looking at what’s going on at the national level with Trump throwing executive orders around and seeing what sticks,” said Wilson, whose organization wants to see the city and Washington state move to more progressive taxes. “From our side, we need to be a little bolder about trying things and seeing what sticks.”

She said discussions will continue about the details, including exactly what would be taxed, what the money would pay for and how any measure would reach the ballot.

The Trump Proof Seattle coalition — whose more than two dozen members include the King County Labor Council, Puget Sound Advocates for Retirement Action, Seattle Education Association and the Tenants Union of Washington State — is most strongly considering a 2.5 percent tax only on unearned income, Wilson said.

It would apply to households with adjusted gross incomes of more than $250,000 a year.

Roughly 5 percent to 10 percent of Seattle households fall into that category, according to the coalition.

Unearned income would include capital gains, interest and dividends but not business income, rental income, stock options and sales of primary residences.

The coalition estimates the tax would generate about $100 million a year. Some potential uses for the money are affordable housing, transit service and green jobs, Wilson said.

She said the money could also replace federal funding. Trump has threatened to halt grants to so-called sanctuary cities. Mayor Ed Murray considers Seattle a sanctuary city because it limits its own involvement in immigration enforcement.

“We don’t want to get too hung up on what it would fund in case there’s a challenge,” Wilson said. “We’re still talking about that.”

The Seattle-based Economic Opportunity Institute has been working for years on strategies to reform our state’s inequitable tax system.

The coalition could collect signatures for a citizen initiative. The aim would likely be to qualify an initiative for the November ballot, Wilson said.

Another option would be the City Council’s adopting an income tax directly into law. The coalition has met with multiple members, Wilson said.

“We have strong interest from a number of them,” she said.

On Monday, Mayor Ed Murray said supported a state income tax when he represented Seattle neighborhoods as a lawmaker in Olympia.

“Our state’s regressive tax system has always been a barrier to adequate, long-term funding for critical functions such as education,” Murray said.

“Today’s proposal … is intriguing, though it faces a long legal road before any revenue could be collected, making it ill-fitted to address some of our immediate needs such as homelessness and possible federal funding cuts.”

Olympia voters rejected a ballot measure in November that would have imposed a 1.5 percent city tax on all income for households making more than $200,000 a year.

The income tax, which would have raised $2 million for college-tuition assistance, lost with 48 percent of the vote.

Olympia’s mayor and City Council stood against the measure, and opponents had some success accusing supporters of not being forthright about using the measure as a legal test case, Wilson said.

In 2010, Washington voters rejected a statewide initiative that would have created a 5 percent tax on wealthy households and a 9 percent tax on superwealthy households.

Bill Gates Sr., the attorney father of the Microsoft co-founder, campaigned for that measure, along with venture capitalist Nick Hanauer. Paul Allen, Microsoft’s other co-founder, opposed it, and the initiative won only 36 percent of the vote. The measure failed in every Washington county other than San Juan, but Seattle voters bucked the trend by strongly supporting it.

Wilson said the Transit Riders Union is taking a leading role because the organization is tired of asking voters to grit their teeth and pass taxes that hit poor people the hardest.

The state’s tax system is among the country’s most regressive: Poor Washingtonians pay an effective tax rate seven times higher than wealthy ones do.

“We’ve been putting boots on the ground for all these transit measures because we want to improve the transit system,” Wilson said.

“But all these measures have been really regressive. We’ve had to go to our members and the public and say, ‘If you want a better transit system, then we have to raise the sales tax or slap on some more car-tab fees or raise property taxes.’ ”

John Burbank, executive director of the Economic Opportunity Institute, said he’s hopeful this year’s Seattle push will benefit from the new political state of play.

Turnout was down in Olympia last year, particularly among Democratic Party voters, he said. Now many Seattle voters are energized Trump resisters.

“There’s a real desire to not just protest but to do something that means real progress at the local level, so this is a great time to move forward,” Burbank said.

Information in this article, originally published Feb. 27, 2017, was corrected March 3, 2017. A previous version of this story said a 2010 ballot measure that proposed a statewide income tax failed in every county. It passed in San Juan County.