The Seattle City Council’s Affordable Housing, Neighborhoods, and Finance committee heard more information from city staff and listened to public comment Wednesday about a high earner income tax proposal.
The proposed ordinance a 2 percent tax will be placed on single households making more than $250,000 annually and joint households making more than $500,000. Only money made in excess of those levels would be taxed, according to city council member Kshama Sawant.
Currently, those households pay, on average, 2.4 percent of their income in state and local taxes, according to the Institute on Taxation and Economic Policy. In comparison, households making less than $21,000 pay 16.8 percent in taxes.
It is for this reason that Murray said Washington's state tax structure is one of the most regressive in the country, "putting the burden on many of our most vulnerable residents... working people, families, and communities of color."
City staff estimates the tax would create about $125 million in profit each year. The proposal claims the generated income will allow the city to "lower the burden associated with property taxes and other regressive taxes," account for funding that might be lost due to President Trump's budget cuts, support public services including housing, education, and transit, and/or create environmentally friendly jobs to meet the city's carbon reduction needs.
Seattle would be the first jurisdiction in Washington state to impose a city-wide income tax. The state does not have an income tax.
Seattle City Attorney Pete Holmes expects a “vigorous legal challenge," possibly to the state Supreme Court. He said the ordinance is merely a draft at this time and is a work in progress. Holmes said he and staff are advising city council members in writing the ordinance.