Seattle City Council To Study Possible “Millionaires Tax”

By Darren Smith, Weekend Contributor

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The Seattle City Council is considering a resolution directing the city Law Department to investigate the possibility of imposing an excise tax on individuals having incomes in excess of one million dollars.

Washington has no state income tax. Seattle’s pursuit of this might be attractive to many voters who view income tax as a form of balance against what is considered by some to be the regressive nature of Washington’s taxation system. Yet voters over the years have resorted to the voting booth to end the discussion among some politicians who have tried to enact similar measures. The city garnered much national attention by working toward a controversial fifteen dollars minimum wage.

Seattle might have a difficult task if it chooses to enact such an ordinance as the State Supreme Court declared income taxes of this type to be unconstitutional.

The text of the measure being considered by the City Council reads:

Statement of Legislative Intent:

Council requests the Law Department research the legal possibilities that exist to impose an excise tax on annual individual or \ household earnings in excess of $1,000,000. This will prepare council and advocates of progressive revenue sources to draft legislation to institute progressive measures like a millionaires tax in 2016.

It is intended to mitigate the effects of Washington State’s tax structure, the most regressive in the United States, which forces the poorest 20% of the population to pay 16.9% of their income in local taxes while the wealthiest 1% pay only 2.8%. A excise tax on households earning $1,000,000 or more per year could generate revenue to address Seattle’s affordable housing crisis, expand human services, which are currently underfunded and facing cuts, and fund mass transportation projects. Households earning less than $1,000,000 per year would not be affected.

That could prove difficult to enact.

When the matter was being considered by the legislature, in the 1970’s the Washington Attorney General’s Office issued an opinion that such laws are most likely unconstitutional.

… [The] “uniformity” clause of Article VII, § 1 (Amendment 14) which states that:

“. . . All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax . . .”

Moreover, the term “property” as thus used is expressly defined in this section of the constitution to mean and include,

“. . . everything, whether tangible or intangible, subject to ownership. . . .”

By reason of this definition, the Washington supreme court has on several occasions declared both individual and corporate income to constitute a class of property so as to be subject to this constitutional requirement of uniformity. See, Power Inc. v. Huntley, 39 Wn.2d 191, 235 P.2d 173 (1951); Jensen v. Henneford, 185 Wash. 209, 53 P.2d 607 (1936); and Culliton v. Chase, 174 Wash. 363, 25 P.2d 81 (1933). Furthermore, because of this requirement, the court in each of these three cases struck down as unconstitutional the income tax laws which were there involved; chapter 10, Laws of 1951, Ex. Sess., chapter 178, Laws of 1935, and chapter 5, Laws of 1933.

Since the Seattle proposal would apply to incomes in excess of one million dollars, it will be difficult to bypass constitutional constraints. In order to effect such a change the state constitution would need amending, something highly unlikely considering the unpopularity of an income tax among voters.


Seattle City Clerk’s Office
Washington Attorney General’s Office, Opinion on Income Taxation, December 26, 1974

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79 thoughts on “Seattle City Council To Study Possible “Millionaires Tax””

  1. Nick, your communism definition is perfect. Everything over 3 Million is taken and redistributed to the poor. This is easy, leave Seattle. When Richard Gebhart passed excise taxes of 10% on luxury items, for sake of discussion, yachts. What Gebhart didn’t understand was actions have consequences.the wealthy bought their yachts in other countries. The yacht builders here nearly folded. This is why Democrats can’t help the economy, they haven’t a clue how it works. Gebhart was shocked that they didn’t continue buying yachts here. He never understood that 10% more for a sizeable amount of money drove them away. They are not stupid Americans we hear about today. A tax credit for the wobbly yacht builders would help. But they just can’t give the wealthy a way to keep their money. I see wealthy executives like Warren Buffet, say they are taxed too little. Well, Warren, you can write a check for as much as you want and send it in. Without the excise yachts would have continued to be built/bought here. Every Cingress should have an Economy 101 class you must attend and test well, or you don’t vote! It would do a world of good.

    1. Sandi – speaking of Democratic taxes, has Kerry ever moored his yacht back in MA?

  2. Karen S —

    I do not see what objectives and approaches you are taking for a tax policy. Nor do I find your analysis of the effect of a tax on other people at all convincing.

  3. Karen,
    What’s interesting is while the purveyors of policy focus on how to gruber the means, their grubered constituents focus on the ends. This leaves those ungrubered as the sole voice of reason for all the ‘unintended” consequences. Why can’t we seem to have a rational and reasoned debate over all of those things that invariably blow up the ‘intended’ consequences?

  4. This post reminds me of Gruber’s explanation of the health insurance tax. He said that, in order to get it to pass, they had to say the fee/tax was going to be on the evil insurance companies. No one would vote for it if it affected themselves. But those companies were just going to turn around and pass that on to their customers. He said they took advantage of the lack of economic awareness of the average American voter.

    So when people pass taxes on “other people” they fail to realize that it will eventually affect them. In this case, when you add another tax to the rich, they will have a set # of responses – pay the tax and make less money, find other tax shelters to offset, or move and take all their tax revenue with them.

    When we tax businesses, or double the minimum wage, those businesses either scale down, or pass on the added cost of business to their customers. So it’s really the rest of us who end up paying more.

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