Seattle tax on high-income earners unconstitutional
Thursday, August 1, 2019

Seattle tax on high-income earners unconstitutional

By Payroll and Entitlements Editorial Staff

The Seattle ordinance imposing a personal income tax on high-income earners was invalid because the state constitution’s uniformity requirement bars any graduated income tax.

Authority to adopt tax. The Washington appellate court noted that it was required to follow the Washington Supreme Court’s existing decisions holding that an income tax is a property tax. Although the appellate court concluded that Seattle has the statutory authority to adopt a property tax on income, the state constitution requires taxes on property to be levied uniformly.

Under Seattle’s taxing scheme, income was broken into two classes and taxed at different rates. Therefore, the tax violated the uniformity clause.

Prohibition on net income taxes invalid. Although there was also a state law prohibiting local taxes on net income, that law was itself unconstitutional because the bill enacting it violated the state constitution’s single subject rule. (Kunath v. City of Seattle, The Court of Appeals of Washington, Division One, No. 79447-4-I, July 15, 2019.)

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