Matt McIlwain, managing director of Madrona Venture Group, has founded a non-profit to fund legal challenges to Seattle’s new income tax on high earners.
The group, called the Opportunity for All Coalition, claims Seattle’s newly-passed tax is “illegal” and “unnecessary.”
Earlier this month, the Seattle City Council passed a 2.25 percent tax on income that is more than $250,000 per year ($500,000 for joint filers). The tax does not apply to all income earned by Seattle’s wealthiest residents; just 2.25 percent of dollars above the $250,000 threshold would be collected.
The tax is intended as a test case to determine whether a Washington law that says local jurisdictions cannot tax income violates the state’s constitution. Its first legal challenge came Friday, though McIlwain says the coalition was not involved in that suit.
“I believe there are times when you need to serve your community,” McIlwain told GeekWire in an email. “In defeating the city income tax, we can help maintain a system of opportunity and job creation for innovators and workers.”
McIlwain has been outspoken in his opposition to an income tax in Washington. At a conference in January, he said often hears that people moving to the region for tech jobs are happy to escape a state income tax. McIlwain and the Opportunity for All Coalition believe that Seattle’s existing tax structure and future revenue from the city’s growing population are sufficient.
“We have a tax revenue problem, and the problem is what are we going to do with all the incremental tax revenue we have received from our three primary sources,” McIlwain said at the January conference.
Washington state currently relies on sales, property, and business taxes as its primary sources of funding. The system is often called the “most regressive in the country” as lower earners pay a higher percentage of their income in taxes.
“Because we’re seeing such incredible investment and creation of job opportunity and economic growth, that’s why our tax revenues are growing so much in this state,” McIlwain said in an interview with Fox Business Monday. “Creating great job opportunities, twice the national average in wage growth, so those are the kind of issues we’re really concerned about as a nonpartisan group trying to defeat this income tax.”
GeekWire has reached out to McIlwain for comment. We will update this story when we hear back.