Seattle, WA. Five Seattle residents today filed a lawsuit in King County Superior Court, challenging the City of Seattle’s recently passed illegal income tax. The plaintiffs, who include small business owners, entrepreneurs, and technology workers, noted in the complaint that “Washington law expressly prohibits any city from imposing any tax on net income.”“We think this is a straightforward legal case,” said Dena Levine, a Seattle small business owner and one of the plaintiffs. “State law is clear in prohibiting cities from enacting income taxes. Unfortunately, city leaders have decided to waste precious financial resources on test litigation instead of focusing on the important needs of all city residents. It’s a shame.”The complaint notes that Seattle has seen record job creation, economic growth, and expanded opportunity for all — without an income tax. In fact, the State’s Department of Commerce touts that the absence of an income tax creates a significant competitive advantage, helping attract businesses, investments and workers.Data supports investing in the current economic ecosystem. Seattle has been creating jobs at twice the national average, and has an unemployment rate of only 2.6%. Workers in a range of fields make more per hour than their national counterparts, from computer programmers and human resources managers to cashiers and restaurant cooks.As wages have increased, Seattle’s median household income – one of the most commonly-used indicators of general household wealth throughout a region – has outpaced gains across the nation. According to the U.S. Census, Seattle’s median household income increased by nearly $10,000 from 2014 to 2015, when it reached more than $80,000 per year. This was the largest increase of the 50 most populous cities in the country.
“I left California to escape broken tax policies,” said plaintiff Chris Rufo, a documentary filmmaker. “I think the recently passed income tax puts Seattle’s simple and successful formula of economic growth under threat.”
The complaint also makes clear that the tax is unnecessary: “As its businesses have flourished and its citizens have prospered, the City of Seattle’s revenues have ballooned. Just in the last four years, the City’s total revenues have grown more than 33%, from approximately $4.1 billion in 2013 to a projected $5.4 billion in 2017, an increase of more than $1.3 billion.” City employment is also up substantially. Since 2014, the City has increased its payroll by more than 1200 employees.
The Opportunity for ALL Coalition (www.opportunityforall.us) is a non-profit organization whose mission is to support a legal challenge to the recently passed Seattle income tax. The Coalition’s legal team includes former Washington State Attorney General Rob McKenna, former Supreme Court Chief Justice Gerry Alexander, former Supreme Court Justice Phil Talmadge, and Dan Dunne, a litigation partner at Orrick Herrington.
Matt McIlwain, who helped found the Coalition, says he is seeing significant support not only from Seattle residents, but from across the state as well. “Most Washingtonians understand that the Seattle City Council is using this city income tax as a test case to push for a broader income tax that will ultimately apply to everyone statewide,” said McIlwain. “But this tax is illegal, unnecessary and limits opportunity in our city and state.”