Newspapers have clear message for Seattle on income tax

Dec 9, 2017

Seattle has officially filed notice with the State Supreme Court an intent to appeal the court ruling invalidating its local income tax. New Seattle Mayor Jenny Durkan has called an appeal a "long shot." As I told KIRO radio, there is a slight chance Justices may decline to hear this case if it first goes to the Appeals Court and Judge Ruhl's decision declaring the Seattle income tax illegal on statutory grounds is upheld. In the meantime, newspaper editorial pages have a unanimous message for Seattle: This is not the way to try to change state tax policy. 

Here are the editorials to date since King County Superior Court Judge John Ruhl issued his devastating ruling calling Seattle's income tax illegal: 

  • Seattle Times (12/8): Seattle should drop its dead-end income-tax case
    "Seattle should abandon its costly and wrongheaded pursuit of an illegal income tax. A judge last month eviscerated the city’s legal justification of the high-earners income tax, affirming that cities in Washington have no authority to impose income taxes. Seattle officials should not appeal . . . Remember, it wasn’t Seattle officials’ idea to pick a legal fight over the income tax. They were urged to do so by a labor-backed advocacy group that looked around the state for a compliant city to carry its water. After a failed attempt with the city of Olympia, the Economic Opportunity Institute worked behind the scenes with Seattle officials to draft and pass the income-tax measure, develop a legal strategy and spin it as a righteous battle against 'privilege.' Their tortured legal arguments and semantic games to justify an illegal tax were demolished by King County Superior Court Judge John Ruhl in a summary judgment last month. 'Regardless of what label one may choose in classifying the city’s tax, the requirement remains that the Legislature must specifically authorize the tax,' Ruhl wrote. The same point was made Thursday by the state Supreme Court, when it rejected tax preferences in the city of Spokane. The ruling said taxes must be uniform — not tiered — under the state constitution, and cities need tax authorization from the Legislature."
  • Tacoma News Tribune (12/2): Sorry, Seattle, this is no time for income tax talk 
    "Seattle tried to wriggle around state law by arguing what the council adopted is not an income tax, rather it’s an excise tax on wealthy people privileged enough to call Seattle home; furthermore, the city argued the tax was levied on 'total income' instead of net. But King County Superior Court Judge John R. Ruhl basically said if something looks like an income tax and quacks like an income tax, it is an income tax . . . The timing of Ruhl’s ruling was perfect, coming the month before Gov. Jay Inslee releases his 2018 budget proposal and six weeks before the Legislature convenes. It should send a signal to lawmakers, in case they didn’t already get the memo, that now is not a favorable time for income tax talk — especially during a short legislative session, and an election year, to boot."

    Note: This editorial was also reprinted in the Longview Daily News
  • Longview Daily News (11/28): Truth on taxes — Part 2
    "An income tax is illegal under the Washington state constitution, which when challenged, has been upheld by the State Supreme Court on more than one occasion . . . The unspoken reason the Seattle City Council is trying to find a way to enact a city income tax is because many Democrats want a statewide income tax. If the city of Seattle could persuade the court that a city income tax is legal under the state constitution, it would pave the way for a statewide income tax. Seattle’s theory also extends to other taxes that possibly could be enacted as well. For example, Gov. Jay Inslee has supported implementation of a capital gains tax, which is another form of an income tax. In every state that has a capital gains tax, the tax is classified as an income tax. As it stands today, the Washington state constitution states that an income tax is illegal and since a state income tax is illegal, other income-related taxes, such as a capital gains tax, also are illegal."
  • Yakima Herald Republic (11/27): Judge makes right legal decision on income tax
    "All along, a sense of statutory manipulation has driven the city of Seattle’s effort to impose an income tax on city residents. The Seattle City Council passed it unanimously in July, and then-Mayor Ed Murray signed it into law, knowing full well that past state Supreme Courts have found that an income tax violates the state constitution. Proponents knew the tax would draw a court challenge, but their hope was that sympathetic judges would employ a supple reading of the law and uphold their action. And the day before Thanksgiving, in what is likely to be the first round of legal wrangling, the ploy gained neither judicial sympathy nor suppleness — as well it shouldn’t." 

    Note: This editorial was also reprinted in the Spokesman Review and Tri-City Herald
  • Wall Street Journal (11/27): An Income Tax by Any Other Name
    "Seattle’s City Council openly ignored the state of Washington’s law and constitution when it voted unanimously in July to levy a 2.25% tax on its wealthy residents. The Freedom Foundation, a local think tank, and other organizations sued to block the ordinance. In pleasant news that received little attention because it came down on the day before Thanksgiving, the King County Superior Court ruled that the tax is illegal. Seattle’s defense relied heavily on linguistic contortions. A Washington statute explicitly forbids cities and counties from taxing net income. So city councilors claimed they were really taxing 'total income,' even though they were using a federal tax-form line item that tallies various net earnings and net income sources. Dismissing this argument, Judge John R. Ruhl noted that 'the sum of several net figures necessarily is a net figure.'"
  • Vancouver Columbian (11/26): King-Sized Failure on Tax
    "A ruling Wednesday in King County Superior Court confirmed what most observers already believed: Seattle’s proposed income tax upon high earners violates the state constitution. Equally notable, voters across the state have said numerous times that they have no interest in establishing an income tax. In other words, the Seattle City Council earlier this year undertook a wasteful and time-consuming action that belies the wishes of voters . . . Following last week’s ruling by Judge John R. Ruhl, state Rep. Brandon Vick, R-Vancouver, said: 'I hope this sends a clear message to Seattle politicians that it is time to listen to the will of the voters. I am hopeful this latest court ruling will deter local governments from using the courts to circumvent the legislative process.'"

Should this case eventually reach the state Supreme Court Justices should be able to re-issue this one-page income tax ruling from the state Supreme Court in 1960 (in-part): 

"The argument is again pressed upon us that these cases were wrongly decided. The court is unwilling, however, to recede from the position announced in its repeated decisions. Among other things, the attorney general urges that the result should now be different because the state is confronted with a financial crisis. If so, the constitution may be amended by vote of the people."

As judges, editorial pages, and what's left of civics education has taught us, the way to change the constitution is through a constitutional amendment with approval from the sovereigns of the state - not through tortured tax linguistics trying to package an income tax as an excise tax (hear that capital gains tax advocates?). 

Additional Information
Seattle Mayor calls income tax appeal a "long shot"
Lawmakers receive capital gains tax lesson in Seattle income tax ruling
Timeless advice from WA Supreme Court on income taxes