Seattle’s graduated income tax failed its first legal challenge after King County Superior Court judge John R. Ruhl found it to be unconstitutional under state law.
“Today’s ruling is a victory for all taxpayers in Seattle and throughout the state, and for everyone who values the rule of law,” said Brian T. Hodges, a senior attorney with Pacific Legal Foundation who represents several Seattle residents in challenging the tax. “The court performed a service for all taxpayers, and all property owners, by defeating the city’s strategy to undermine their rights.”
Signed by then-mayor Ed Murray in July, the ordinance imposed a tax on the income of wealthy residents of the city of Seattle, despite a provision in the Washington state constitution specifically mandating that taxes must be uniform on the same class of property. It was on this basis that Hodges and other groups challenged the ordinance.
In its defense, the city of Seattle argued the tax isn’t an income but an excise tax, on the privilege of receiving revenue in Seattle or choosing to live there. Ruhl did not concur, pointing out that the city itself has labelled the ordinance as an “income tax” outside the court.
If the city hopes to win on appeal, it must find a way to convince a judge that income cannot be regarded as property. Until then, it stands no chance.