Yesterday Seattle passed an income tax on very high earners. Income in excess of than $250K, or $500K as a couple, will be taxed at a rate of 2.5%.
Washington doesn’t have an income tax. In fact, our state supreme court has ruled a number of times that income tax is, in fact, unconstitutional.
What gives? Seattle is inside of Washington, ergo the income tax is not just illegal, but unconstitutional.
So now we are at an impasse. Already there has been an organization that has filed suit against the City of Seattle to get it thrown out. More will follow, I’m sure.
Instead of raising income, this bill has immediately started to cost our city money — money from the taxpayers right now (property tax and sales tax). This gets worse though. The State of Washington doesn’t have a tax administration because income taxes are unconstitutional; Seattle can’t piggy-back off of the state’s revenue service. So now we not only have to defend this bill, but we also need to hire and train a staff, create detailed tax laws, supply the department with hardware and software to handle the collections.
To what end?
Certainly, the council and mayor get brownie points from their “tax the rich” constituents. Great. But now we’re all further behind.