Washington’s state constitution provides that all taxes must be “uniform upon the same class of property.” The Washington Supreme Court has repeatedly held that income is property and, therefore, the state’s constitution prohibits targeted income taxes. Nonetheless, Seattle’s city council unanimously adopted an income tax that targets the city’s “high-income” residents by imposing a 2.25 percent tax on any individual earning more than $250,000 per year, or married couples earning over $500,000 per year, and an initial rate of 0 percent on everyone else. Sold as a “wealth tax,” the ordinance was a Trojan Horse that threatened the rights of poor and middle class families. By its plain language, the ordinance imposed an income tax on each and every resident of the city. The income bands and tax rates were temporary. Experience shows that, once a source of tax revenue opens, the government will mine it—meaning that every income level would have been exposed to new taxes.
PLF represented Scott Shock, Sally Oljar, Steve Davies, and John Palmer, Seattle residents and taxpayers who sought to invalidate the illegal income tax. They challenged the city’s unilateral actions in violation of the state constitution and laws, which threatened not only the taxpayers’ rights but also the state’s economy, which derives substantial benefits from the constitutional barriers to targeted income taxes. The city council was well-aware that the Washington Supreme Court had repeatedly invalidated graduated income taxes as unconstitutional, but hoped that the court would overturn the characterization of income as property and open the door to more taxes. Ultimately, the Washington Supreme Court did not, leaving in place a lower court ruling invalidating the tax.