One year ago, the Seattle City Council unanimously passed the first progressive income tax in our state in 85 years. This tax on incomes in excess of $250,000 for individuals and $500,000 for families will produce sufficient revenue – more than $200 million a year – to lower property taxes, provide affordable housing and transit, replace federal funding cut by the Trump Administration, create green jobs, enable tuition-free community college for all residents, and fund other public services.
It is a tax that speaks directly to the privilege and power of the top corporate executives and the 1 percent of Seattle residents who have benefited enormously from the ongoing transfer of income from middle- and low-income to wealthy Americans. So it was no surprise that these same wealthy people sued to block Seattle’s income tax. They are represented by the Koch Brothers-funded Freedom Foundation, which is trying to decapitate unions as the organizations voices for workers, and the Pacific Legal Foundation, which succeeded in rolling back civil rights law.
As anticipated, the King County Superior Court ruled against the City of Seattle. According to precedent, subordinate courts do not overturn decisions that were made by the court that has final decision-making power, in this case the State Supreme Court. However, EOI and the City of Seattle have requested direct review from the State Supreme Court. If the State Supreme Court agrees to direct review, then we can expect oral arguments in the fall, and a decision in 2019 or 2020.
While the legal maneuverings proceed, the acceleration of income to the affluent is unabated. Using 2014 IRS data, we projected the City of Seattle would raise about $140 million a year from this tax. Using 2015 data, we now project that the City would raise $170 million a year. As of 2015, 10,000 residents would be contributing to this tax, roughly the wealthiest 2.25 percent of all Seattle households. We also know that Seattle has the most regressive tax system in our state, with people who earn less than $25,000 contributing over 18 percent of their pre-tax income in state and local taxes, and those with incomes in excess of $250,000 contributing less than 5 percent.
The Trump-Proof Seattle Coalition, and, in particular, the Transit Riders Union and EOI, created the political and policy force to move this income tax through the city council. Our opponents would like people to believe that this income tax is dead. It is not!
Indeed, by suing the city of Seattle, our opponents have created the legal pathway to the State Supreme Court, thereby enabling that court to uphold Seattle’s income tax and create the foundation for a progressive and robust tax system, in Seattle, in other municipalities, and statewide.
These legal battles take years. We have good reasons to believe that we will prevail. What the Seattle City Council voted into law one year ago today will be seen, when we look back in time, as a catalytic moment for progressive taxation in Seattle. You helped make that happen. Now we have to be patient and enable our legal teams to do their very best work to ensure that the State Supreme Court upholds this law.
Thank You and Happy Anniversary!