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Seattle mayor, 2 City Council members propose city income tax on the rich

SEATTLE -- Mayor Ed Murray and City Council members Kshama Sawant and Lisa Herbold on Monday proposed a new tax on high-income households.

The proposal would place a 2 percent tax on joint filers’ income over $500,000 and single tax filers’ income over $250,000.

They said the estimated $125 million in new annual revenue would allow the city to lower the burden associated with property taxes and other regressive taxes, replace federal funding potentially lost through President Donald Trump’s budget cuts and enhance public services such as housing, education and transit.

“Washington state’s tax structure is the most regressive in the country, putting the burden on many of our most vulnerable residents,” Murray said. “Leaving cities with only regressive tax options puts the heaviest burden on working people, families and communities of color. By replacing a system that relies too heavily on property and sales taxes with a progressive income tax, we can ease that burden and generate revenue to invest in Seattle priorities..."

Sawant said, “I ran for office four years ago on a program of a $15 per hour minimum wage, to tax the rich, and for rent control. We won $15 by building the 15 Now grassroots campaign. Now we’re on the cusp of taxing Seattle's rich, because socialists, activists, and community organizers have tirelessly built up our movement over the years.”

Herbold said, "People earning $20,000 a year devote two entire months of pay to their yearly tax bill; the 1 percent pay their annual tax bill in only six days. A tax on high incomes will give Seattle a more equitable revenue structure to fund affordable housing and services addressing homelessness, education, transit, and climate change, and it could also be dedicated to lowering other regressive taxes and replacing federal funding potentially lost to Trump budget cuts."

The Institute on Taxation and Economic Policy has found Washington state’s existing tax structure to be the most regressive in the nation, disproportionately hitting low-income households. ITEP found in 2015 that state and local taxes paid by the 20 percent of Washington families with the lowest incomes amounted to 16.8 percent of their income. In contrast, the tax burden for the 1 percent of families with the highest incomes was 2.4 percent of their income.

The City Council will conduct an initial public hearing on the city income tax proposal on June 14. Final action is anticipated by mid-July.