Attorney expresses concerns over Seattle income tax lawsuits

The attorney representing a Seattle investment manager in a lawsuit over the city’s income tax says there’s a simple argument against the ordinance, but some people want to make the issue overly complicated.

Timeline: The road to an income tax in Seattle

“That is precisely my concern,” Attorney Matthew Davis told KIRO Radio’s Jason and Burns.

Davis is representing Michael Kunath. He says people are trying to make the argument against the income tax to complex.

“Under the Washington state Constitution, cities and counties do not have an organic power to levy taxes. They can only levy taxes that [were] authorized by the Legislature.

“The Legislature has never passed a statute that allows them to do that.”

He adds that, in the 1980s, the Legislature passed a law that says a city or county cannot levy a tax on net income.

“End of story,” he said.

Seattle Mayor Ed Murray signed the ordinance with little fanfare on July 14. The Seattle City Council unanimously approved the tax on July 10.

If there were no lawsuits filed, the 2.25 percent income tax would be applied after Jan. 1, 2018 to residents who make more than $250,000 individually, or $500,000 as joint filers. The tax would apply to any earnings above the set limits.

The city estimated the tax would pull in about $140 million in revenue that could be used to lower the burden associated with property taxes and other “regressive” taxes. Money could also be used to address the homeless crisis and help fund affordable housing, education, transit, and replace funding lost through federal cuts.

But lawsuits will be filed. And despite the issue being so straight forward, at least one needed to be filed in order to fight a city income tax.

“A court won’t strike it down unless someone files a lawsuit,” Davis said.

But there’s another problem, Davis said: other people. There are some who are speaking about the lawsuit in broader terms, Davis said. He says they are trying to make a “political point.”

He says supreme courts across the country have incorrectly interpreted their state Constitutions, which have led to income taxes.

The city, Davis says, is hoping to have the process become a “muddled mess.”

Listen to the entire conversation here.