Seattle’s Income Tax Ruled Illegal
27th November 2017
King County Superior Court Judge John Ruhl, in a summary judgement, sided with many angry city residents who contended the local income tax violated state law. Ruhl rejected a wide range of arguments cooked up by Seattle to save its legally dubious levy.
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Seattle’s progressive income tax, passed unanimously by the City Council in June, levied a 2.25 percent rate on individual incomes above $240,000 or $500,000 for joint filers.
The tax proved immediately and wildly unpopular. Three State Supreme Court decisions have called the progressive income tax a violation of Washington’s state constitution. A 1984 state law reinforced those rulings, flatly saying “a county, city, or city-county shall not levy a tax on net income.”
Apparently the Left Coast is still part of America.
Getting around the plain text of the law required some creativity. The council defended its ordinance as a tax on “total income”—as defined on various IRS tax forms. Ruhl decided the IRS’s “total income” figure incorporates various deductions and write-offs, making it in fact a measure of “net income.”
Seattle also tried to argue that their ordinance—whose own text describes itself as “imposing an income tax”—was not an income tax at all, but rather an excise tax. The distinction is that an excise tax is levied “on a taxpayer for voluntarily exercising a certain right or privilege.”
Living and earning a wage, according to Seattle’s legal team, is a privilege that residents choose to exercise, and thus can be taxed.
The proglodyte mind laid bare.