Kshama Sawant introduces legislation for Seattle income tax

Jun 12, 2017, 6:00 PM | Updated: Jun 13, 2017, 9:15 am
Sawant, tax the rich, income tax...
Kshama Sawant. (AP)

After weeks of leaders talking about a Seattle income tax proposal, socialist City Councilwoman Kshama Sawant introduced legislation for it on Monday.

About the tax

Mayor Ed Murray made comments in the spring about the idea of proposing a 1.5 percent city income tax on “high-end” households and high earners.

According to a report a council committee in May, Seattle has the most regressive state and local tax system in the country. Regressive tax means the rate goes down as personal incomes go higher–lower income earners pay higher tax rates than the highest earners.

The new income tax proposal seeks to make the tax system more progressive by shifting more of the tax burden to the wealthy.

RELATED: Microsoft’s Steve Ballmer warns against a Seattle income tax

Sawant introduced actual legislation for the proposal on Monday. It creates an income tax of two percent on all income over $250,000 for an individual and $500,000 for a couple. For example, if a household has an income of $300,000, $50,000 of that would be taxed. And the city would collect $750.

Councilmember Lisa Herbold is co-sponsoring the legislation and Mayor Ed Murray is expected to endorse it.

What supporters say

Proponents of the tax say it would create a more even playing field in a city that’s becoming too expensive for low- to middle-income taxpayers to afford.

In early May, the City Council unanimously supported a resolution in favor of a Seattle income tax. The resolution did not make the tax official, but it expressed the council’s intent to “adopt a progressive income tax targeting high-income households.”

Sawant has taken to social media and held a town hall to build momentum behind her movement, which she calls “Tax the Rich.”

“For decades, poor and working class people in our state have paid far more of their income in taxes than the super-rich. Now with Trump’s billionaire-backed right-wing administration threatening massive tax breaks for corporations and the super-wealthy alongside vicious cuts to social programs for ordinary people, thousands are getting organized. We need to use this momentum by winning a tax on Seattle’s rich this year,” she wrote in a blog post.

What opponents say

The “tax the rich” narrative has another side.

Critics say the majority of the wealthiest taxpayers in Seattle are small-business owners, managers and professionals with incomes of $250,000 or more.

Some believe a progressive tax would create an unfriendly business climate and could drive companies away or prevent new ones from forming.

KIRO 7 News talked to former Microsoft CEO Steve Ballmer, who said in May that an income tax would hurt Seattle.

‘There would be fewer jobs here with an income tax than without an income tax,” Ballmer said.

Ballmer believes tech companies would have to pay higher wages to maintain their competitive advantage over California, which has a 14 percent income tax.

Legislative obstacles for the tax

It’s illegal for cities to impose an income tax under the Washington state constitution, so if the tax passes, it will no doubt be challenged and likely reversed.

If the council can get the court’s approval, it can move forward with a progressive income tax.

State Rep. Brandon Vick told KIRO Radio that he wants to pass a bill that will shut down any legal attempt that Seattle can take toward an income tax.

He’s not alone. Republican state Sen. Phil Fortunato has his own companion bill to Vick’s. If Vick and Fortunato are successful, then no attempt by any Washington city or county for an income tax will go anywhere in the future.

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Kshama Sawant introduces legislation for Seattle income tax