State Court Of Appeals Rules Seattle’s Wealth Tax Is Unconstitutional, But Gives Cities New Leeway

Seattle’s tax on wealthy households is unconstitutional and should remain off the books for now, the Washington state Court of Appeals ruled Monday.

But Seattle and other Washington cities are allowed to tax net income as a matter of law, the Court of Appeals also determined in its significant ruling, declaring void a 35-year-old ban enacted by the Legislature and opening the door to a battle at the state Supreme Court that could have far-reaching consequences.

First, the city’s opponents have argued the tax violates that 1984 law banning Washington cities from taxing net income.  A King County Superior Court judge sided with the opponents on that point, killing the tax before the city had begun collecting the money.

Second, the opponents have argued the tax violates a provision of the Washington Constitution that says property must be taxed uniformly, at the same rate for everyone.  The lower-court judge didn’t need to address that point.