By Darren Smith, Weekend Contributor
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.
Sources:
Seattle City Clerk’s Office
Washington Attorney General’s Office, Opinion on Income Taxation, December 26, 1974
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