Court ruling letting WA cities impose flat income tax will stand

Apr 3, 2020, 12:34 PM | Updated: Apr 7, 2020, 8:47 am
Income tax, Washington state...
A controversial decision from an appeals court could blaze a trail for an income tax in Washington. (Photo by Chris Hondros/Getty Images)
(Photo by Chris Hondros/Getty Images)

The Washington State Supreme Court announced Friday that it would be declining a petition to hear arguments in Seattle’s income tax case.

Opinion: History of Washington’s income tax shows why we need it

This means Seattle’s 2017 legislation that would have levied a 2.25% tax on incomes over $250,000 is effectively dead.

“That’s the end of the road for this piece of legislation,” said Seattle City Attorney Pete Holmes.

It also means Seattle — or any other city in Washington without a local ban of its own — still can levy an income tax, provided it’s uniform across all tax brackets.

That comes about as a result of a shocking July decision from the Washington State Court of Appeals. In early November, the appeals court rejected a request to take a second look at its ruling.

After that, an appeal was made to the state Supreme Court, where the City of Seattle had hoped 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.

Diving into Seattle’s case for an income tax

Opposing the city’s case was the Pacific Legal Foundation, which had hoped to see the state Supreme Court overturn the lower court ruling allowing a flat income tax.

With the Washington State Supreme Court declining to hear the case, the lower court’s decision allowing Seattle to impose a flat income tax stands.

Now, if Washington cities want an income tax, it would need to be applied evenly across every household, regardless of what they make yearly.

Holmes noted in a written statement that his office will be “exploring all options available under that decision” in the days ahead.

“Seattle has the authority to adopt an income tax, and I believe we can craft a proposal that can help make our tax system less regressive,” Seattle Mayor Jenny Durkan echoed in her own statement.

Clarification, 4/7/20: The lawsuit filed by the Pacific Legal Foundation was the result of a consolidation of several cases filed against Seattle’s income tax ordinance, with the Freedom Foundation the first to file a suit in August of 2017.

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Court ruling letting WA cities impose flat income tax will stand