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Seattle income tax case heads to Washington State Supreme Court

The income tax continues to spark debate statewide.(Chris Potter, Flickr)

Seattle’s income tax saga will soon head to the Washington State Supreme Court. This comes after an appeals court refused to reconsider a July ruling, when it previously stated that a uniform tax across all earners was constitutional.

Court rules Seattle can impose an income tax in stunning decision

The decision came in on Wednesday, succinctly rejecting an appeal that asked the court to take a second look at its July ruling.

“The panel has determined that the motion for reconsideration and the request for oral argument be denied,” the ruling reads.

This leaves the door open for a showdown in Washington’s Supreme Court, where a few different things will need to be decided:

  • Whether the income tax on high-earners Seattle approved in 2018 can be implemented at all
  • Whether the appeal’s court decision allowing a uniform tax across all earners is Constitutional
  • Whether income qualifies as property

The City of Seattle is hoping to see a 90-year-old legal precedent that labels income as property overturned, something that’s been a major roadblock toward levying an income tax anywhere in Washington state.

Meanwhile, Seattle City Councilmember Lisa Herbold is planning ahead, with a budget proposal for implementing the tax should the city win its case in the state Supreme Court.

Seattle City Council knew income tax was illegal before passing tax

Should the proposal get struck down, Councilmember Sally Bagshaw has a separate, alternative idea:

“Re-examining the possibility of an unearned income tax, which we know is constitutional if it starts at $0,” she proposed. “We consider this far more progressive.”

Essentially, Bagshaw’s proposal would levy a tax against things like stock dividends, interest, and capital gains.

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