Seattle Mayor Ed Murray made news this week when he proposed a city income tax. Here’s a look at Washington’s long history with such proposals, and where things stand today.
Seattle Mayor Ed Murray caused a stir Thursday at a forum for mayoral candidates when he revealed he plans to propose a city income tax on “high-end” households.
He had earlier this year declined to endorse a coalition of nonprofit organizations and labor unions in their push for a Seattle income tax, calling the approach ill-fitted for to address immediate needs.
That was before former Mayor Mike McGinn, in launching a comeback bid Monday, called for a city income tax.
Though Murray’s announcement at the 46th District Democrats forum was a surprise, the story behind the proposal stretches back decades. So let’s get caught up.
Washington is one of only a few states in the country with no statewide or local income tax on individuals. During the Great Depression, voters approved an income tax on individuals, but the state Supreme Court struck that down, saying it violated the state Constitution’s requirement that taxes be uniform within a class of property.
The state Legislature later authorized a tax on the gross incomes of businesses — the business-and-occupation tax that still exists today.
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But voters have several times since rejected proposals to tax individual incomes, most recently in 2010, when a statewide initiative for a high-earners tax was defeated (it passed among Seattle voters).
And in 1984, the Legislature passed a law prohibiting counties and cities from taxing net income.
As a state senator, Murray supported the 2010 initiative for a statewide income tax on high earners. Since he became mayor in 2014, Murray has backed several winning votes to increase city property taxes.
Those tax hikes are paying for public preschool, parks, roads, affordable housing and transit. But the mayor has come under fire recently for relying so heavily on a tax that’s considered “regressive” because people with less wealth pay the same rate as the rich.
Murray announced a $275 million property-tax measure in February, saying the money would help Seattle combat homelessness — then abandoned the idea barely a month later.
Meanwhile, the Trump Proof Seattle coalition went to work, touting its campaign as a response to the threat of the city losing federal funding under President Donald Trump and hosting “town hall” events in each of the City Council’s seven districts.
The coalition says a Seattle income tax would almost certainly be challenged in court and could serve as a legal test case with statewide implications.
The coalition initially considered a 2.5 percent tax on the unearned incomes (capital gains, interest and dividends) of households making more than $250,000 per year. The aim was to qualify an initiative for the city’s November ballot.
Those plans soon changed, and the coalition now is proposing a 1.5 percent tax on income above $250,000 per household per year, switching to gross income from unearned income because allies are pursuing a capital-gains tax at the state level.
A household with a gross income of $300,000 per year would pay $750 — 1.5 percent of $50,000, and the tax would raise more than $125 million per year, according to the coalition.
Rather than qualify an initiative for the ballot, Trump Proof Seattle now is lobbying the City Council to enact the tax by voting it into law.
Five council members — Lisa Herbold, Bruce Harrell, Kshama Sawant, Rob Johnson and Mike O’Brien — have publicly declared their support, according to Katie Wilson of the Transit Riders Union, which belongs to the coalition.
None of the other four — Debora Juarez, Sally Bagshaw, Tim Burgess and M. Lorena González — have come out flatly against the campaign, according to Wilson.
Sawant’s office has begun writing an ordinance to enact the tax, she said in an email to the council’s other members Friday.
In a news release Friday, Trump Proof Seattle said it wants the ordinance passed by the end of July, before the August primary election.
The mayor offered scant details about his own income-tax proposal Thursday, saying he would send legislation to the council sometime in the next few weeks.
Murray didn’t reveal what the rate would be nor which households would be considered “high end” enough to be taxed.
He did say that at least some of the new tax revenue would be used to pay for reductions in existing, more regressive taxes.
And the mayor said his legislation will be a resolution stating the city’s intent to pass an income tax rather than an actual ordinance putting it into effect, like Sawant is working on.
For that reason and because even a resolution could trigger a court challenge, Murray’s vow Thursday is somewhat abstract.
Though it made headlines during the first major forum of the 2017 race, well-off Seattleites won’t be paying Murray’s income tax anytime soon — certainly not before the November election.
Asked during the forum whether they would support a city income tax, McGinn and educator Nikkita Oliver joined Murray in the affirmative. Urban planner Cary Moon didn’t, saying Friday she favors new taxes on capital gains and luxury real estate.
Casey Carlisle, who identifies as a Libertarian, said he opposes any additional taxes, believes an income-tax is illegal and called Murray’s proposal an attempt to distract voters from more important issues.
“When McGinn raised the idea of an income tax, then Murray jumped on board,” Carlisle said.
Editor’s note: An earlier version of this story, citing a Trump Proof Seattle coalition news release, said the coalition wanted an ordinance passed by the end of August. That was a mistake in the release, according to Katie Wilson of the Transit Riders Union, a member of the coalition.