Judge Blocks Seattle’s ‘Millionaire Tax’

Published January 9, 2018

The city government of Seattle, Washington is asking the state Supreme Court to review a county judge’s decision blocking a “millionaire tax” targeting high-income earners living in the city.

The Seattle City Council in July 2017 approved an ordinance placing a 2.25 percent annual income tax on individual residents with income of more than $250,000 a year or households earning more than $500,000 a year.

Seattle residents represented by lawyers from the Freedom Foundation, a think tank with headquarters in California, Washington, and Oregon, filed a lawsuit in the Superior Court for King County, arguing the tax violates a state law prohibiting municipal income taxes.

On November 22, 2017, Judge John Ruhl ruled in favor of the plaintiffs, blocking the tax’s implementation.

Instead of contesting the decision in the state Court of Appeals, the city’s lawyers filed paperwork on December 15, 2017 asking the Washington state Supreme Court to hear the case.

As of this article’s publication, the Supreme Court has not dediced whether or not it’ll consider the appeal.

Unequal Tax Treatment

Jami Lund, a senior policy analyst at the Freedom Foundation, says a millionaire tax is unfair and un-American.

“The tax very deliberately singled out some people not because they’ve done something wrong but merely because they have more resources,” Lund said. “To identify those people, to single them out with wealth extraction, would’ve been horrifying to the founders of the country and to the idea of equal application under the law.”

Lund says there’s still work ahead.

“It’s not over by any stretch, but for right now, the people of the City of Seattle can act as if there is no such ordinance,” Lund said.

‘They Were Playing a Game’

Jason Mercier, director of the Center for Government Reform at the Washington Policy Center, says the City of Seattle’s lawyers argued living there was a kind of transaction.

“They were trying to say this is an excise tax on the privilege of living in Seattle,” Mercier said. “They were playing a game here. If it’s an excise tax, the ‘excise’ is on a transaction. An income tax is a tax on the value of your income. There’s no transaction involved.”