Court Strikes Down Seattle Tax on High-Income Earners

The ordinance adopted by Seattle to tax high income residents was struck down. Although the tax ordinance was entitled “Income Tax on High-Income Residents,” the city characterized the tax as an excise tax. However, to the extent that the ordinance imposed a tax on the privilege of receiving pay for labor, that privilege was not a valid basis for an excise tax.

The Court also rejected the alternative argument that choosing to live in Seattle was an activity subject to the City’s excise tax authority. In addition, the City did not identify any specific statutory authorization for its tax. Further, by imposing a tax on net income, the City’s ordinance was prohibited by statute.

Kunath v. City of Seattle, Superior Court (Washington), No. 17-2-18848-4, November 22, 2017, ¶204-314

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