VIDEO: Full Council to vote on income tax Monday after committee approval today

That’s the archived video of this morning’s meeting of the City Council’s Affordable Housing, Neighborhoods, & Finance Committee, which voted unanimously for CB 119002, the “income tax on high-income residents.” The five councilmembers present and voting were committee chair Tim Burgess, the bill’s sponsors Lisa Herbold and Kshama Sawant, Sally Bagshaw, and Mike O’Brien. That sets up a final vote by the full Council next Monday morning (July 10th). You can see the full bill here; its key points: “a tax on individual residents with total income above $250,000 per year ($500,000 for joint filers) …” The tax would be levied only on the income beyond that amount, not on the first $250K (individual) or $500K (joint). The income beyond those amounts would be taxed by the city at 2.25 percent. Here’s what the bill says the money would go toward:

All receipts from the tax levied in this Chapter 5.65 shall be restricted in use and shall be used only for the following purposes: (1) lowering the property tax burden and the impact of other regressive taxes; (2) addressing the homelessness crisis; (3) providing affordable housing, education, and transit; (4) replacing federal funding potentially lost through federal budget cuts, including funding for mental health and public health services; (5) creating green jobs and meeting carbon reduction goals; and (6) administering and implementing the tax levied by this Chapter 5.65.

The big question remains, what happens after the full council vote, considering that an income tax is against state law? City leaders say they’re ready to fight anyone who sues, thinking that it could lead to a ruling changing state law.

Scott July 5, 2017 (1:37 pm)

Sorry an Income tax is not legal.

WSB July 5, 2017 (3:03 pm)

Yes, that’s mentioned in the story. And the city expects a court challenge, and is gambling that it might win.
- Brewmeister July 5, 2017 (4:44 pm)
  
  It will never win. But the council members will look like “heros” to many of their base voters. This is purely a political “feel good” move. To bad many in this city are falling hook, line and sinker for this. This is pure politics at its best, er I mean, worst.
  - ChannelingLewisBlack July 6, 2017 (12:14 pm)
    
    Yeah – feels good to set up a 7-figure legal fight to lose…yay team….
- Gretchen July 6, 2017 (12:22 pm)
  
  They should all be penalized for wasting taxpayer time and resources on this. This has been tried 9x in the past. NINE!! What makes them think that they’re going to succeed this time?
  
  I can’t believe people aren’t outraged at the wasting of resources as they try to push something that is unconstitutional!

J July 5, 2017 (1:38 pm)

Can those high earners create a LLC entity which they can use to report lower personal income?

dsa July 5, 2017 (4:30 pm)

LLC is one way, I am positive that there are other escape routes, just think about it.
- DarkHawke July 6, 2017 (4:00 pm)
  
  I can name a few: Renton, Bellevue, Redmond, Everett, Tacoma, etc., etc….

I. Ponder July 5, 2017 (3:10 pm)

If it’s such a great idea why not lower the threshold to say $150k? Likely because there would be many more folks who would oppose it. This is one of those TAX OTHER PEOPLE taxes.

junctioneer July 5, 2017 (3:15 pm)

It’ll be $150k before you know it. Then $100k, then $50k. And it can never be undone because to undo it is to give money to rich people.
- Wsea July 5, 2017 (4:02 pm)
  
  I completely agree with you. Once you create a tax, it never goes away and only impacts more as time goes on. We will be a California taxed state before you know it.

SMITTYTHECLOWN July 5, 2017 (3:32 pm)

This will be interesting. Households of 500K plus sounds great – until they start to lower the threshold. My guess is that in 10 short years it will be down to households of 250K to help fund some unforeseen emergencies.

Careful what you wish for folks!

sgs July 5, 2017 (3:58 pm)

I didn’t have time to listen to more than about 20 minutes of the hearing and I scanned the text of the law and didn’t see it, but is there any info as to the expected revenue from this tax? Lowering the burden of property tax would be great, but that is going to take A LOT of revenue coming in from this.

ChannelingLewisBlack July 6, 2017 (12:15 pm)

lowering the burden of property tax before or after our democrat leaders in the state sold us down the river to meet the budget?

Gene July 5, 2017 (4:22 pm)

Junctioneer- exactly- this is a foot in the door maneuver for sure.

Mark July 5, 2017 (4:24 pm)

Junctioneer once Pandoras box is opened the tax threshold will quickly be reduced. That is how the Fed Income Tax started.

I’ve lived in Seattle for over 30 years and have never seen taxes go up at such a rapid pace ever. With the economy good taxes should not be going up, the City should be saving for a rainy day.

Swede. July 5, 2017 (5:20 pm)

My guess you haven’t seen such a amount of people moving here either during your 30 years right? Which is exactly the problem, infrastructure, transportation etc. can’t keep up since here is not enough money coming in vs. needed to go out.
- Rick July 5, 2017 (7:14 pm)
  
  Maybe if developers were required to contribute some impact fees the burden wouldn’t be placed entirely on the taxpayer.

Seattlite July 5, 2017 (4:43 pm)

This is why Seattle is getting such a bad reputation for consistently poor leadership. The city council is not doing the right thing, as usual, by King County voters no matter where their income levels fall. Where do all of the tax dollars go? Seattle’s leaders are well known for not figuring out how to handle city expenditures, how to budget for city expenditures, how to basically use common sense when spending the voters’ hard earn taxed dollars. Instead, Seattle’s leaders continue to tax the heck out of voters.

Swede. July 5, 2017 (5:22 pm)

It’s a great idea but like pointed out by others too, how much will this really bring in and what will it be used for? Will it be just salary income or cover bonuses, capital gains etc.?

wscommuter July 5, 2017 (5:40 pm)

IMHO … the gamble that by passing a patently illegal tax and “hoping” that a court will see things differently is a remarkable waste of time and money. The state supreme court will (and should) rule such a tax as illegal, given the law in WA. It reminds me of a child who wants to ignore objective facts in favor of wishful thinking about how he or she wants things to be. See our current president for the archetype.

Laudable goal, and I’d fully support a state-wide income tax as a way of solving the regressive system we have now. But this attempt by the City is irresponsible and misguided. Unfortunate.

Ms. Sparkles July 7, 2017 (10:26 am)

Well said, EXACTLY what I was thinking.

Gene July 5, 2017 (5:44 pm)

SMITTYTHECLOWN- if you think it will only be 10 years & the threshold will be 250,000 – you’re living in a dream world- it will be much sooner & much lower. I do agree with you though- be careful what you wish for folks!.

LJ July 5, 2017 (5:49 pm)

Our socialist city counsel will never have enough of our money to satisfy all of their pet projects.

If the city really does need more money start cutting the future retirement benefits of city employees not an income tax.

Swede. July 5, 2017 (7:21 pm)

Those ‘city employees’ are some of the last middle-class workers left in Seattle. Contrary to popular belief city/state/government employment doesn’t pay much, which today in overpriced king county is barely middle-class…

Groucho July 5, 2017 (6:55 pm)

Why are they wasting tax dollars even discussing this?

M July 5, 2017 (7:45 pm)

Or they could put their energy toward reducing the existing waste of our tax dollars.

SWinWS July 6, 2017 (3:47 pm)

True, I think we need more transparency all around but, Washington State has some of the most regressive tax policies in the country (tax burden is primarily footed by middle/lower incomes) generated by property and sales taxes–I have seen my property taxes increase by 35% in the last 4 years, and yet, middle income wages have flatlined. We need a serious conversation about where our tax dollars (esp. the latest cash cow related to Marijuana revenue), etc. are going– but, the truth is that corporations/wealthy individuals are not paying a fair percentage based on income like the working class is shouldering. I remember a few election cycles ago voters gave Verizon and other corps a ridiculous tax break …so who has to make up for the 100s of millions of dollars of tax revenue…we do! I applaud them (city council) for taking on the task of restructuring tax burden.

rob July 5, 2017 (8:13 pm)

here we have a gal that has never drawn a pay check from the private sector. People that have worked hard to get where they are are now to be pentilzed for all the work they have done, Weather you belive it or not these people already pay close to 40% of our cities buget. And they are only 5% of our cities population. Just remember one thing and keep this in mind all you folks that work in the trades .WE dont go to work for poor people we go to work for rich people that in fest and put us all to work

people

Chuck July 5, 2017 (8:46 pm)

Why are they wasting time and money on this? Because it’s not their money and time they’re wasting. It’s ours.

Greg Nickels did this in 2008 when he banned guns from city properties and parks. It took nearly four years, thousands of hours of city employee time, and doubtless hundreds of thousands of dollars researching and defending this policy in the courts before it was ultimately defeated.

Tim Burgess did it in the final months of his last run for city council. He proposed and passed a regressive tax on guns and ammo in the city of Seattle. This is currently being fought in court at taxpayer expense. The tax has resulted in a net loss in revenue for Seattle along with an increase in gun violence.

What do these examples represent? The purpose of proposing policies that will either be found unconstitutional or die on the vine is to play to the progressive/socialist base that elects people in Seattle with no cost to the politician in question. The “high wage earners” who would be affected by the income tax know that it will never fly. Everyone who is for it now will have re-elected or promoted their favorite council member by the time the Supreme Court kills it in 3-4 years. The only losers are the citizens of Seattle who are paying the freight for this Kabuki dance.

Seattlite July 5, 2017 (11:30 pm)

Chuck…You are right on the money…such a well-composed comment. King County’s middle class and seniors on fixed incomes have suffered the most from the onerous tax increases that never seem to stop. Seattle is on its way to being a city of rich and poor, no more middle class. The writing is on the wall so to speak.

I❤️WS July 5, 2017 (9:17 pm)

Those ‘city employees’ fully fund their own retirement by having 10% of their wages taken automatically from their paychecks. Contrary to some people’s beliefs, this is NOT a city funded retirement.

Anonymous Coward July 6, 2017 (5:13 am)

They’re on a defined contribution plan and not a defined benefit plan? Or is that 10% sufficient to cover all future liabilities using a realistic anticipated rate of return? (Realistic rate of return, as opposed to the pie-in-the-sky 7-8% (or more! on 2% GDP growth!) used by almost every other municipal pension fund?)

Junction Lady July 5, 2017 (9:49 pm)

WS since '66 July 6, 2017 (6:33 am)

Let me see if I have this correct. A move towards a more
progressive tax system and all here are opposed to it. Does anyone remember the
economy and what we could afford back in the 1950s and 1960s? Many could live
on one income. Granted we are paying for more “things” like cell phones and
internet, etc. However, the middle class existed and was strong. The budget was
more in balance. Remember those days? If you do then you may remember the top
marginal tax bracket for Federal income tax was 92%. That doesn’t mean everyone
paid 92%. The corporate tax rate was just over 50% and Capital gains almost
30%. That is how a society pays its bills instead of kicking the can down the
road with a big deficit. Finally, if they don’t get the money from those who have it, then
those who live paycheck to paycheck will have to make up the difference. As
Seattlite puts it “King County’s middle class and seniors on fixed incomes have
suffered the most from the onerous tax increases that never seem to stop.” This is one way to help those “middle class
and seniors on fixed incomes”. Just one
man’s opinion.

Seattlite July 6, 2017 (10:51 am)

WS since 66 –“It’s easier to fool people, than convince them that they’ve been fooled.” Mark Twain

WS since ’48

David Hoover July 6, 2017 (7:02 am)

Thy will sneak it in for the top earners and then everyone will be next mark my words

Peter July 6, 2017 (7:14 am)

As others have pointed out, this most-likely will never fly, and if it does will hit more than just “the rich” in relatively short order. It’s simple pandering to the voting base. This reminds me of the number of seemingly intelligent folks I spoke with who couldn’t grasp the concept that higher property taxes impact everyone, and not just property owners. That landlords mostly likely would, and sometimes almost literally had to, pass that cost along as higher rent. The reality that landlords wouldn’t simply eat that cost somehow escaped them.

Peter July 6, 2017 (7:25 am)

@WS since ’66: I would agree with you, *IF* I thought the revenue collected would really help “the middle class”, of which I am one. Unfortunately, the track record in place indicates any extra money collected will simply be absorbed into the general budget like so many other “worthy” taxes. Remember what the State Lottery was supposed to fund?? Combine that with the likelihood it’ll be shot down by the State Supreme Court after a lengthy and costly battle, and it seems in itself to support the wasted tax dollars theory. My .02.

Charley July 6, 2017 (8:01 am)

Well said, WS Since ’66.

I’d be willing to bet that every one of the gripers here will happily point their fingers back at the times you referenced as the golden years when America was great, but god be damned if they’re going to pay for it.

A sustainable America is a taxed America. That’s how it works. You like highways, parks, and non-crumbling infrastructure? That’s how they happen.

ChannelingLewisBlack July 6, 2017 (12:20 pm)

We as constituents should be extremely disappointed in our representation; the spearheading of ever more revenue without any visible signs of improvement in our quality life, or reasonable fiscal constraints – regardless of how noble a progressive tax might be – should be a resounding no at this point. My property tax will now be double it was in 2014 when I bought my house. Three years. And 3rd and Pine is still gritty, the speeds down California and Alki are still too high, too much gunfire, and the encampments under the WS Bridge remain. What are we achieving here folks??

Seattlite July 6, 2017 (2:55 pm)

Chaneelinglewisblack…Hopefully, all voters are looking into the lack of resolution to the problems you listed and so many more…like the homeless problem. Where do our tax dollars go if not to resolve all of the outstanding problems facing King County?