Frequently Asked Questions
About the Proposed Measure
Q: What exactly is being proposed?
· The measure we are currently considering most strongly is a 1.5% tax on income in excess of $250,000 per year. That means if your household has an Adjusted Gross Income of $300,000 per year, the tax would apply only to $50,000, and it would amount to $750. In other words, your first quarter million is tax-free.
Q: Who would have to pay the tax?
· The tax would apply only to households with Adjusted Gross Income (that’s line 37 on your 1040 form) over $250,000. Somewhere between 5% and 10% of Seattle households fall into this category.
Q: Will businesses also be taxed?
· No, this is just a tax on personal household income.
Q: How much revenue would this measure generate?
· We estimate that a 1.5% tax on income in excess of $250K would raise over $125 million per year in the City of Seattle. For comparison, the housing levy passed last year is just over $40 million per year, and the city’s total annual budget is on the order of $5 billion.
Q. When will Seattle start getting this revenue?
· It’s important to understand that we expect this measure, once passed, to be legally challenged. The question of whether a progressive income tax is allowed by Washington State’s constitution, and also what kind of taxing authority municipalities in Washington State have, are legal grey areas. (If they weren't, we wouldn't be in this situation!) Today’s State Supreme Court is progressive and very cognizant of our state’s need for new revenue to fund things like education, and we are hopeful that they will decide in our favor. A final decision from the court could take one to several years.
Q: Wait, I thought the Trump-Proof Seattle Campaign was proposing a tax on unearned income. What happened?
· For a while we were considering a tax that would apply only to capital gains, interest, and dividends. However, we heard concerns that passing a local tax on unearned income could interfere with state-level efforts to advance a capital gains tax, since we expect our measure to be tied up in court for a while. So we switched. Adjusted gross income is simpler, anyway!
Q: What will the revenue be used for?
· This is still under discussion among the organizations in the coalition and city councilmembers. One possibility would be to dedicate the revenue to compensating for federal budget cuts that impact Seattle residents.
About the Strategy
Q: Why only Seattle? Why not the entire state?
· Washington State desperately needs a statewide progressive income tax, and we see passing a measure in Seattle as a strong step in that direction. Seattle is the best place to start because our city is progressive and willing to push the envelope to do the right thing.
Q: Taxing wealth is a great idea, but it'll never happen. Why now?
· Seattle voters have already shown support: In 2010, the statewide high-earners income tax Initiative 1098 passed in Seattle by 63%, even though it failed at the ballot statewide.
· Trump: As we are fighting many defensive battles at the federal level, local movements that can win tangible victories become even more important. As the massive turnout at the Womxn's March and many other rallies shows, people are ready for action.
· The McLeary Decision: Time is running out for the state to find a way to fund our schools, and parents are upset. We need a new revenue source!
· Tech is booming: There is so much wealth in our community, alongside stark poverty and homelessness. With a more equitable tax system we would be able to address some of the crises that the tech boom is exacerbating, such as affordable housing and crowded schools.
· A Progressive City Council: Several councilmembers have already indicated their support for a measure along the lines we have proposed, and most have expressed strong interest. We just need to show some political will!
· A Strong Coalition: Over 35 Seattle organizations have signed on to a letter urging city elected officials to take action this year.
Q: An income tax just in Seattle, does anyone do that?
· Yes. In fact, almost 5,000 jurisdictions across 17 states have local income taxes. Mostly in Pennsylvania and Ohio, but notable cities outside those states include New York, San Francisco, Portland, and Denver. (Source)
Q: Even if it passes, won't it be found unconstitutional?
· A statewide income tax was passed twice in the 1930s and overturned both times by the State Supreme Court. The court ruled that income is a form of property, and therefore subject to our state constitution's restrictions on property tax, which set a ceiling of 1% and permit only a flat tax. We expect that today's progressive State Supreme Court will reverse those rulings, based on legal developments in Washington and other states since the 1930s. But in order for them to do this, first a measure needs to be passed and challenged!
Q. Does a city like Seattle really have the authority to pass a tax based on income?
· This is a legal grey area. The conventional wisdom is that cities in Washington State cannot do anything without explicit permission from the state legislature. However, our campaign's legal research leads us to believe that, based on a careful reading of the Washington State Constitution and court decisions, cities actually have much broader authority than is commonly recognized. Of course, we do not know how the State Supreme Court will rule today. We are testing the waters! This is how we move forward.