SEATTLE A King County Superior Court judge heard arguments Friday for and against Seattle’s proposed income tax.
The outcome of this case will reverberate across the state.
The judge issued no ruling. Whichever way he rules, it likely will end up at that state supreme court.
The case was filed this summer by the Freedom Foundation and the Seattle law firm Lane Powell, PC, on behalf of 20 city residents after the Seattle City Council approved an income tax that would target high earners.
Judge John R. Ruhl indicated he might issue a ruling prior to Thanksgiving, but nearly everyone agrees the case will ultimately be decided by the Washington State Supreme Court.
Ruhl’s decision will, however, give the victorious side the early bragging rights while setting the legal agenda for the inevitable appeals.
“This is a hugely important case – not just for Seattle but for the entire state of Washington,” said Freedom Foundation Chief Litigation Counsel David Dewhirst. “What the city council’s attempting to do is both illegal and unconstitutional – and the members know it.”
The Freedom Foundation’s legal team made a comprehensive argument against the tax, which
would levy a 2.25 percent tax on individual incomes of more than $250,000 and household incomes of more than $500,000.
The foundation noted Washington cities lack plenary taxing authority and only have what taxing authority the state Legislature has granted them.
The city’s statutory authority to license for revenue does not extend to income tax, they said. The tax is not authorized by the statutes that authorize cities to tax and, to the contrary, it’s expressly prohibited, they said.
Even more fundamentally, the state Constitution is unequivocal in its equal protection clause, which states that taxes must be uniformly applied, lawyers said.
“The whole point of the Seattle tax, however, is to punish the wealthy,” Dewhurst said.
Dewhusrt said the Seattle City Council enacted the tax to establish a legal precedent that can be used to impose a similarly progressive income tax at the state level.