City of Seattle counters income tax lawsuits

The City of Seattle wants the lawsuits against its recently passed income tax shut down before they get to trial.

The City of Seattle has filed a motion for a summary judgement, meaning it wishes the court to determine that the cases fighting its income tax are too weak to go any further. In a statement Friday, the city argues its council was fully authorized by the state Legislature to pass a personal income tax on high-income residents. Attorneys representing the city also argue that Seattle should not be held to court rulings from the 1930s, which some state tax law is based upon.

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“Those nearly century-old Washington Supreme Court decisions relied on case law that is no longer valid, incorrect statements of the law, and unfounded conclusions,” the city’s statement reads.

“Seattle’s personal income tax is best characterized as an excise tax rather than a property tax …” it argues.

A King County Superior Court judge is expected to hear arguments for the case on Nov. 17. The city is being represented by Pacifica Law Group.

Seattle income tax lawsuits

Seattle’s tax has resulted in three lawsuits. Washington law, which was partially decided in court in the 1930s, states that income is property, and that all property taxes must be uniformly imposed. Therefore, it is argued, Seattle cannot pick and choose how much and whose income it wants to tax. Washington law also states that local governments cannot impose income taxes.

The city has fully expected to defend the tax in court, in fact, legal challenges were part of its plan when it passed it. The argument for summary judgment provides insight into the city’s reasoning:

Plaintiffs challenge the legality of the city’s personal income tax. But the tax is within the taxing authority delegated by the state and should be upheld. First, the law taxes residents’ total personal income, not net income. Thus, the state law prohibiting city net income taxes does not apply. Second, the city’s personal income tax is not a tax on property so constitutional restriction on property taxes do not apply. The 1930s cases that held income is property for tax purposes should be overturned because those cases relied on case law that is no longer valid, incorrect statements of the law, and unfounded conclusions. Indeed, the weight of judicial authority at the time, and today, holds that an income tax is not a property tax. Third, the city’s personal income tax is best characterized as an excise tax, or perhaps sui generis (as the Washington Supreme Court recently indicated). The city has been granted broad authority to enact non-property taxes, both in the form of excise taxes and otherwise for all local purposes. Pursuant to these statutes, the city has full authority to enact a local income tax.

The city respectfully requests this court grant it summary judgement and declare the city’s personal income tax both statutorily authorized and constitutional.

“Sui generis” is a legal term that means “unique.”

City’s Motion for SJ PDF

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