Seattle City Council knew income tax was illegal long before passing tax
According to documents obtained by the Washington Policy Center, the Seattle City Council knew long before it passed an income tax in 2017 that such a tax blatantly went against the Washington State Constitution.
Washington Policy Center for Government Reform Director Jason Mercier told KIRO Radio’s Dori Monson that in 2014, the city’s attorney sent the council a memo explaining that an income tax would not be in line with the Constitution.
The Constitution mandates that “all taxes shall be uniform upon the same class of property.”
Still, the council unanimously chose to enact an income tax three years later.
“We were asking ourselves, ‘What is Seattle doing? Everybody knows you can’t do this,'” Mercier said.
The King County Superior Court ruled that the tax was illegal just a few months after its passage; the City of Seattle is now appealing this decision with the Washington State Supreme Court.
WPC just now uncovered the 2014 memo after winning the right to obtain it in a lawsuit against the city. The free market think tank had previously filed a public records request with the city pertaining to the income tax passage, but was told that some documents needed to be redacted due to “attorney-client privilege.”
However, the city shared the 2014 income tax memo with another think tank — one that advocated for an end to the statewide income tax ban — thus providing WPC with the basis for the lawsuit.
In the settlement, WPC also uncovered emails sent between Councilmember Sally Bagshaw from a private Gmail account and her husband — an attorney — discussing the legality of an income tax. The city had previously withheld these emails due to “spousal privilege.”
“Emails that are exchanged on public business are public records … there’s no spousal privilege in the law,” Mercier explained. “If you’re talking about public business, it’s public record.”
In one email, Bradley Bagshaw told the council member — his wife — that the likelihood of a citywide income tax being successful was low.
In my opinion, this tax will not survive a court challenge for two reasons. First, cities are prohibited by statute from enacting any tax on net income. Second, the proposed tax would be unconstitutional under current Washington precedent holding that ‘income taxes’ are ‘property taxes’ which the Washington Constitution requires to be uniform, that is, not progressive. The precedent is from the 1930s and runs contrary to most modern thinking, and forcing the Supreme Court to reconsider this ruling is one reason advanced for pursuing this tax. However, given the statutory prohibition against cities enacting income taxes, it is unlikely that a court would even consider constitutionality and simply reject the tax on statutory grounds. The tax as currently proposed would accomplish nothing.”
“I wish she would have followed his advice,” Mercier commented wryly.
Bradley Bagshaw further said that the income tax law should be changed not with a Supreme Court case, but with an amendment to the Constitution. Mercier agreed that this would be the best way, but pointed out that it has been attempted many times.
“The voters of Washington have been sent six separate constitutional amendments to allow a graduated income tax — and they’ve rejected all of them,” he said. “That’s why you don’t see efforts right now in Olympia, where they’re trying to impose this unconstitutional capital gains income tax — they’re not trying to amend the Constitution, because they know the voters won’t do it. So instead, they try to set up these lawsuits passing income taxes.”
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