A Seattle City Council committee unanimously approved a plan to implement an income tax on the city’s wealthiest residents Wednesday.
With the approval from the Affordable Housing, Neighborhoods, and Finance Committee, the legislation will go in front of the full City Council for a possible vote Monday, July 10.
The measure would levy a 2.25 percent tax on the income of individuals earning more than $250,000 per year ($500,000 for joint filers). The funds would go toward creating housing, meeting carbon reduction goals, alleviating the burden of sales and property tax, and replacing federal funding that could be lost under President Donald Trump’s administration.
City Council approval is the first step in a long journey toward a Seattle income tax. Washington state’s constitution forbids local jurisdictions from levying income taxes on residents, meaning the proposal will almost certainly be challenged in court.
“This type of tax reform is especially important now and Seattle is going to start the conversation,” Councilmember Tim Burgess said during a hearing Wednesday.
Councilmembers Lisa Herbold and Kshama Sawant sponsored the measure. Both stressed the importance of implementing an income tax in the wake of the new state budget, which hikes property taxes to fully fund public schools.
“With the passage of the state budget last week, we’ve learned that will come with an increase in property taxes averaging Seattle homeowners about $400 additional a year,” Herbold said. “The commitment in this legislation to lower the property tax burden and impact of other regressive taxes gives us something to work on right away.”
The tech industry’s well-paid workforce is an unnamed, but nevertheless present, character in this story. There is a growing chasm between many of Seattle’s long-term residents and newcomers drawn to the city by tech jobs with high salaries.
During the public comment section of Wednesday’s hearing, one Seattleite reiterated a common refrain, that the city is home to two of the wealthiest people in the world. Though she didn’t name them, she was referring to Bill Gates and Jeff Bezos. It’s worth noting that an income tax wouldn’t apply to Gates because he doesn’t live in Seattle proper.
The tech industry in Seattle is split on the income tax debate. Former Microsoft CEO Steve Ballmer said the tax could create an “unfavorable business climate” in the city. Others have said an income tax is essential to keep the city financially healthy.
Most people in attendance at Wednesday’s hearing came out to show their support of a citywide income tax, including Molly Moon Neitzel, owner and namesake of the iconic Seattle ice cream shops.
“Seattle needs to be committed to solving these issues in a way that is equitable,” she said. “I absolutely support the Seattle income tax initiative because it’s what’s best for our community and what’s best for my business.”