EXCLUSIVE: Freedom Foundation sues Seattle over controversial new income tax

The Freedom Foundation sued Seattle Wednesday over its controversial new income tax on the rich, which critics call “an assault” on the law that sets a dangerous precedent.

The tax, passed by the Seattle City Council last month, targets high-income earners as part of what local lawmakers describe as “a new formula for fairness.”

The tax measure requires residents to pay a 2.25 percent tax if they are a single filer and make more than $250,000 annually or file jointly and make more than $500,000.

Its passage prompted a court challenge from the Freedom Foundation, a conservative think tank that considers the tax a slippery slope that could open the door to more taxes in the future.

The outrage over the tax even prompted the Washington Republican Party to call for “civil disobedience” and urged its members to “refuse to comply, file or pay.”

STATE GOP URGES 'CIVIL DISOBEDIENCE' OVER NEW SEATTLE TAX, SAYS RESIDENTS SHOULD NOT PAY

Wednesday’s suit, filed in King County Superior Court on behalf of several of the city’s residents, lays out the case against the tax.

“This is clearly bad policy and illegal, but it’s also an assault on the rule of law,” David Dewhirst, a lawyer for the Freedom Foundation, told Fox News in a statement. “If they can get away with it this time, where does it stop?”

'If they can get away with it this time, where does it stop?'

- David Dewhirst, lawyer for Freedom Foundation
The suit argues that Seattle’s plan to tax the rich is unconstitutional, because the state of Washington imposes strict limits on taxes; prohibits taxes on net income; and requires cities to get permission to tax residents.

“This tax ordinance’s legal and constitutional infirmities are patently obvious,” Dewhirst said. “That’s what makes this whole thing so chilling.”

Dewhirst accused city council members of knowingly adopting “a law that can only survive if the courts abandon decades of precedent – precedent grounded in Washington’s fundamental commitment to legal equality.”

Outgoing Democratic Mayor Ed Murray says the goal of the tax “is to replace our regressive tax system with a new formula for fairness while ensuring Seattle stands up President Trump’s austere budget that cuts transportation, affordable housing, healthcare and social services.”

The city estimates the new tax would raise $140 million a year and cost between $10 million and $13 million to set up, plus an additional $6 million a year to enforce. The money would go toward affordable housing projects as well as other services for lower-paid workers.

Councilmember Kshama Sawant told Fox News in July that the need for the tax is “crystal clear.”

She said the city isn’t backing down – and says Seattle is ready to duke it out in court in what’s likely to be a very costly legal battle. http://www.foxnews.com/politics/201...eattle-over-controversial-new-income-tax.html This law needs to be overturned. It is unconstitutional on Washington State to have an income tax. It's not like those targeted by the tax can't simply move to Federal Way or Everett or something to get away from it.

 

Federal Way or Everett? Lol I dont think anyone with money is moving to either of those...

Seriously though, Seattle is dumb. The rich *are* going to relocate, or find loopholes, or bribe an official for an exemption. Thats how it works. The progs are gonna dance around for their feel-good redistribution and the city is going to lose revenue (and businesses and jobs) instead of gaining it.

But it *is* Seattle. Par for the course.

 

I think in some ways Seattle is even more liberal than San Francisco.

 

By that argument, we shouldn’t bother taxing “the rich” at all.

Beyond all of the regional legal issues in Seattle (which sounds like it involves messy partisan politics too), the idea that people who earn a lot more income pay slightly high tax rates is hardly a new or controversial idea and something that is standard practice in a whole load of places and circumstances.

 

That's precious. Trump wins and progressive 1%ers get slapped.

 

Envy has been around forever, that's true. It's also true that the progressive claim about wanting "fairness" is as false as the conservative claim that they are for limited government.

 

If I made that kind of money and lived in Seattle, I would move just outside the city limits.

 

I don’t see any evidence of envy here and I don’t see any implicit unfairness either. Where is it written that a tax system can only be fair if it’s entirely and unconditionally flat? Where has such a “fair” system ever been implemented?

 

In the pre-civil war South they had a very fair tax. 100%. For chattel slaves.

 

You guys should go ahead and come up with some identity politics label to slander all the rich folks that leave. In Detroit, it was called white flight, but I bet those relocating from Seattle will be a mixture of folks.

 

Fairness is being represented in the argument for this tax as equal outcomes. Good luck with that idea of being fair.

 

Why would I want to slander anyone? I’m not really interested in the people in Seattle specifically, I’m just discussing principles and practicalities of taxation.

The question is how do you measure and compare the outcomes though? It clearly isn’t as simple as everyone being taxed the same proportion of their income. There are thresholds and exceptions that already recognise that any given dollar doesn’t have the same practical value to any given individual. If you only have $100, a 20% tax could be the difference between eating or not tonight. If you have a billion dollars, you might not even notice the impact of a 20% tax.

 

You volunteering to pay more too?

 

Why should we be bothering to tax individuals at all? Look at the numbers. We have a population of approx 323.1 million, but a business population of a little more than 27.9 million. We charge income tax to both. Why not just charge a sales tax on all new good/service transactions at the retail level, no exceptions? Then we don't have to track 351 million separate entities, onlly 27.9. It's basic logistics. We can even provide a tax refund to cover the taxes spent on basic necessities of life, such as food, that is no longer tax exempt. It can be done at all levels. Businesses are always the lower number over people.

 

Well I don’t earn anything close to the definition of “rich” being used in this context but I’ve no objection to paying proportionally more in tax than people whose income is significantly lower than mine. My key point is that this is already the case, with different tax brackets and allowances, so the specific proposal in Seattle isn’t the fundamental shift in social policy that it’s being presented as (regardless of whether the actual implementation is legal there).

 

so you don't mind those richer than you subsidizing you, I see.

 

No more than I mind “subsidising” those poorer than me. Wouldn’t that be the case even if we had a single flat tax-rate though? People with more income would still pay more tax in cash terms.

The returns to my unanswered question of how you’re defining the “fairness” you’d want to achieve? What do you actually want?

 

So you don't mind being a net subsidizee instead of a net subsidizer. Got it.

 

Yeah.

'Cuz any tax on high incomes that is acceptable means every tax is acceptable.

Check the State of Washington Constitution, sport.

 

Not hugely no. You clearly see it as a fundamental problem for any one taxpayer to be paying more in cash terms than any other taxpayer. How do you propose to resolve this long established situation?

 

The issue isn't whether we tax the rich or not. The issue is that the state of Washington has a constitution and laws saying no income tax. Period. The city and state rely on other methods to raise revenue.

 

Seems discriminatory to me. There is nothing in the constitution that would allow different treatment of people based on earnings.

 

Zero taxes on food should remain. "Tax refund" would further require paperwork.

I am pro-consumption tax. But I would like to see a necessity tax on secondary homes and excess vehicles applied to all non-rental properties. People who own 15 houses are artificially inflating the value of homes. It needs to stop. You pay a lesser tax on homes you rent to others, and a flat tax annually on all secondary homes, excess vehicles, etc.

 

I don't understand the thought process out takes to make the last point. Additionally, it usually works out worse for everyone.

 

ah, so RWers support breaking the law if they don't like the law.