A Seattle “Millionaires Tax” Would Give Supreme Court Opportunity to Send Message on McCleary

WA Supreme Court

Now is the perfect time for Seattle to pass a “millionaires tax.” With the minimum wage battle coming toward a peaceable end (or so the mayor promises), city council member Kshama Sawant will be free to turn toward the next item on her socialist agenda: taxing the income of millionaires. And with the city in need of finding new revenue to adequately fund human services (not to mention universal preschool, transit, and parks), who better to turn to for a little extra cash than Seattle’s untaxed rich?

But more importantly, there may never come another time when the Washington State Supreme Court is more predisposed toward revisiting the controversial constitutional question that has long threatened our state’s prosperity: Is income property? 

That was the 5-4 ruling of the court in 1933 after voters overwhelmingly passed a graduated income tax initiative, and it has hampered our state government’s ability to fund our basic needs ever since. Even in its day it was a controversial ruling, based on scarce and tenuous precedent—precedent that has since been rejected by every other state and federal court in the land. Everywhere else in the United States of America the courts have determined that income is a transaction that is taxable as such. Only in Washington State do we cling to this arbitrarily contrary definition, backed by not a single word of our state constitution. Go ahead, read it. It’s not mentioned once.

Normally, our elected justices are loath to tackle issues that might anger voters—for example, the decade and a half of legal wrangling it took to force the court to issue its equally inescapable and unpopular ruling on the now-dead two-thirds supermajority requirement for tax increases. But the shameless contempt our legislators have shown toward the court’s McCleary decision may put justices in a different frame of mind.

Under McCleary, the court ordered legislators to increase K-12 spending by an additional $4 billion to $7 billion by 2017 in order to meet our constitutional “paramount duty … to make ample provision for the education of all children.” But that is a legally binding order that legislators aren’t even close to fulfilling. Sure, they’ve restored a little bit of funding to public schools as the post-Great Recession recovery continues. But anybody who knows anything about the state budget, and who discusses it with integrity (that rules out you, Seattle Times editorial board), understands that it is mathematically impossible to comply with McCleary without raising new revenue. And legislators have made zero progress toward that end.

So what are the justices to do? They can’t very well pass tax legislation themselves—that is beyond the power of the judicial branch—and even if they could seize control of the budget writing process, they couldn’t do much better given the insufficient resources available. And as much as I’d love to see some legislators tossed in jail on contempt charges, I’m not sure that would be either legal or constructive.

But what the court could do, given the opportunity presented by a Seattle millionaires tax and the inevitable lawsuit it would provoke, is overturn the 1933 decision, tossing a political hornets nest into house and senate chambers by dramatically multiplying the revenue options available to lawmakers.

That might send a message.

Again, under normal circumstances, the justices would avoid this issue like the plague. Any opportunity to defer due to some procedural or preemptory issue would likely be seized upon. But desperate times call for desperate measures, and with a constitutional crisis looming, the court may welcome any opportunity to give the legislature a kick in the pants.


  1. 2

    ChefJoe spews:

    Don’t you need some parties to bring the issue forward to the court and have it go up through the ranks again prior to simply overturning their previous decision ?

  2. 4


    @2 Yes. But anybody would pay the tax would have standing to challenge it, and once a lower court ruled, either party could attempt to appeal directly to the Supreme Court. It would be at the court’s discretion to accept the case, and rule on the underlying issue regardless of the other preemptory issues that may arise.

    @3 Cities aren’t explicitly barred from levying an income tax. EOI has a proposal that would frame it as a privilege tax—a tax on the privilege of earning over one million dollars. That might get the underlying issue before the court.

  3. 5

    ChefJoe spews:

    @3, of course not. But if Goldy gets his wish and Seattle created a local law (with enforcement… imagine both the SPD and Sawant’s RedShirt-ed army taking Bezos and Dan Savage to lockup on the evening news) the courts would have to get involved in striking down Seattle’s law.

  4. 6

    Roger Rabbit spews:

    @2 See @1. Don’t worry about finding a plaintiff; trust me, we have millionaires who would spend $100,000 to fight a $1.00 tax.

  5. 7

    Moderate Man spews:

    @4 – thanks. Are there numbers somewhere that show how many people in Seattle earn over $1M/year and what the aggregate of their earnings is? That is, do proposals talk about how much money would be raised? IIRC, 1098 did have such numbers.

  6. 8


    @5 You have a bizarre take on the rule of law. If Seattle were to pass a millionaires tax it would be adjudicated through the courts. And if it were found both constitutional and within Seattle’s authority under state statute, most millionaires would compliantly file.

  7. 10

    ChefJoe spews:

    It wasn’t clear that my enforcement fantasy was about Seattle actually enacting the law and making it a spectacle to get a quick ruling (because McCleary was filed in 2007 afterall), not Dan and Jeff evading it. Although I guess you’re right that my fantasy would require them to not pay the tax.

  8. 11

    Roger Rabbit spews:

    So if I make $3,300 a day in the stock market, like I am today, which if you multiply by 365 is $1.2 million a year, would I have to pay tax on the whole $1.2 million or only on the $200,000 over
    $1 million? Just curious.

  9. 12

    kk.in.sea spews:

    Goldy, you need to realize that you are just completely, 100% wrong on this. The State Constitution says: “No tax shall be levied except in pursuance of law; and every law imposing a tax shall state distinctly the object of the same to which only it shall be applied.” (Article VII, Section 5.) Our State Supreme Court has held over and over again that local governments do not have the power to impose taxes without statutory or constitutional authority. (For example, Okeson v. City of Seattle.)

    That’s why all the statutes you refer to you in your post say things like this: “The legislative authority of a rural county may impose a sales and use tax in accordance with the terms of this chapter.” (RCW 82.14.370.) Notice that the Legislature, by this statute, is authorizing certain counties to impose this tax. Without this statute, a county could not impose such a tax. Because, you know, the Constitution.

    So when you say, “State law restricts cities’ abilities to impose nearly every privilege tax you can conceive of,” you’ve got it exactly backwards. State law actually grants cities the ability to impose excise taxes.

    I know, I know, this must be like the Matrix for you. But it’s true. Really.

    Now shut up. There is no further need for you to convince us of your ignorance.

  10. 13

    Roger Rabbit spews:

    @12 has a point. The Okeson opinion states, “A local government does not have the power to impose taxes without statutory or constitutional authority[,]” and, “For a municipality to exercise the power to tax, it must have express statutory authority.” This is straightforward; moreover, it’s not dicta, as it’s dispositive of the issue of the case, which involved an attempt by the city to impose a tax on utility customers by passing an ordinance that shifted street lighting costs from the city budget to City Light.

  11. 14

    headless lucy spews:

    Since the 1933 ruling declares that income is property, wouldn’t it be subject to a property tax?

  12. 15

    Roger Rabbit spews:

    @14 Sure, if there were a tax on that type of property, until someone challenges it and the court then uses that opportunity to overturn its 1933 ruling and hold that income is a transaction, thereby falling into line with other jurisdictions.

  13. 16

    headless lucy spews:

    re 15: Is there any particular legal reason why there isn’t a tax on that type of property?

  14. 17

    Roger Rabbit spews:

    I have conceptual problems with the notion that income is property. Income consists of property, but the term “income” describes an act relating to possession of the property, not the nature of the property itself. There is nothing in the term “income” that tells you whether the property involved is tangible or intangible, or consists of money, chickens, or whatever. On the other hand, in law all things are possible, regardless of the plain meaning of words. Such are the miraculous powers of courts to conjure novel and unprecedented conceptual paradigms from thin air, as it were.

  15. 18

    Roger Rabbit spews:

    @16 Given the pervasiveness of taxation, one has to wonder why legislative bodies left that stone unturned.

  16. 19

    Moderate Man spews:

    @16 – Roger can explain it better, but yes there could be a property tax on income. However, property taxes have restrictions, like uniform rates and a 1% cap, that wouldn’t work for a high earners’ tax on income. I guess there could be a flat 1% tax on all income.

  17. 20


    @12 First of all, there is precedent for municipalities imposing privilege taxes without explicit statutory authority, so it is not at all clear that the court would rule as you suggest. But second, that’s entirely beside the point!

    It does not matter if a Seattle millionaire’s tax ultimately survives legal challenges. The goal is to give the supreme court the opportunity to address the underlying constitutional issue. And the court is at liberty to do so once the case is before it.

    Finally, simply a passing a millionaires tax in Seattle has political value in itself, as it shows that a majority of voters in the state’s largest city support such a measure.

    Washington will not pass substantial tax restructuring until there is political leadership on this issue, we will not get political leadership on this issue until the 1933 decision is overturned, and we will not overturn the 1933 decision until we pass some sort tax bill that challenges it. No doubt you are happy for us to be stuck in this chicken-egg scenario. But me, I’m out to break a few eggs.

  18. 21

    headless lucy spews:

    Would bonuses and interest income also be considered property? If they were considered property, but in a separate class other than income, you could tax both the income and the interest income — as they are different kinds of property.

  19. 22

    TerraceHusky spews:

    @20 It’s a long path to tax restructuring. But sadly I think there’s another hurdle the state has to clear: public opinion. Thanks to the initiative process, even if all three of those first hurdles were cleared (Seattle Millionaires tax, 1933 overturned, the political leadership needed to pass an income tax), it’s virtually certain that such a hypothetical income tax would be challenged, and a strong chance it would meet a very ugly fate. Just a few years back, I-1098 was soundly defeated, 64-36. This is going to be an immensely difficult hurdle to clear statewide.

    However, I do think that Seattle, if it’s given the authority to levy an income tax locally, would be able to establish a progressive city income tax which could be used to fund many of the city’s needs (Metro, schools, Pre-K, etc.).

    It’s less than ideal, but rural voters are absolutely convinced that they’re getting shafted, and they’re determined to vote down any new taxes that they assume will be funneled to “Those People” in the urban core. It’s the reality, and I think we need to acknowledge that and act accordingly. Seattle will probably need to raise its own taxes to adequately fund its needs. Fortunately, this city is wealthy enough to make it happen. If Seattle can do that, then any voters in Benton County who want to gut-punch the state revenue stream will only hurt themselves.

  20. 23

    Roger Rabbit spews:

    @21 Bonuses etc. can be both a type of income and a type of property (e.g., cash, stock options, or whatever).

  21. 24

    Roger Rabbit spews:

    @20 You’re way ahead of the rest of us, Goldy. You’re right, this is not a legal issue.

  22. 25

    Roger Rabbit spews:

    @22 Seattle doesn’t need any new taxes. To meet the city’s needs, all we have to do is keep taxes paid by Seattle residents that are currently being sent to people in outlying counties who think they’re subsidizing us. They could use a dose of reality by being forced to either pay for their schools and roads or do without.

  23. 26

    wl spews:

    The issue was taxing so called property at a graduated rate. That is easy to fix, even if you accept the definition of income as property. Make the tax rate flat, like say %5 and give everybody an exemption for their first say $100,000 of income. We have a well established precedent of exemptions for the first portion of various taxes. We don’t need a complicated legal challenge that may not work. We Just need a legislature willing to honor McCleary.

  24. 28


    @26 No, it’s much more complicated than that, as there are all sorts of restrictions on property taxes. There is a one percent cap on property taxes, and the maximum exemption is $15,000. It would require a constitutional amendment to change that for intangible property like income.

    If we could do a flat income tax with a high exemption like you described, I’d be all the for that. It would be much more progressive than the taxes we have now. But we can’t.

  25. 29

    Roger Rabbit spews:

    What Washington ultimately needs to do is adopt a tax structure in line with what over 40 other states do — a mix of income, sales, and property taxes. That doesn’t have to imply high taxes. A modest increase in revenue coupled with a more reasonable distribution of tax burdens would provide significant tax relief to lower income households and small businesses. People with high incomes would pay more, but so what? They’re severely undertaxed now, and all that would do is require them to pay their fair share.

  26. 30

    ChefJoe spews:

    So the legal argument is that property must be taxed uniformly according to the state constitution… and income is property.

    They could always do it the way they do “low income rebates” for low income people, like prop-1 had proposed. Yes, there’s a limit of 1% (except where places haven’t grown 1% in the past..) but I don’t think that limits high income earners to 1% tax rates.

    Just make sure the overall tax burden only grows by 1% a year, apply a rate of 3% income tax on people making over 200k, setup a system of stepped rebates for everyone making below 200k such that they’d get most of their money back, and gradually improve.

    The Washington state Constitution requires that all taxes be uniform upon the same class of property within the territorial limits of the authority levying the tax. In order to comply with this constitutional mandate and ensure that all taxes are uniform, all real property must be valued in a manner consistent with this principle of uniformity. Also, to comply with statutory and case law, the county assessor must value all taxable real property in the county on a regular, systematic, and continuous basis.

  27. 31


    @30 No, you are confusing I-747’s limit on revenue growth with the constitutional limit (oddly known as the statutory limit) under Article VII, Section 2:

    … the aggregate of all tax levies upon real and personal property by the state and all taxing districts now existing or hereafter created, shall not in any year exceed one percent of the true and fair value of such property in money.

    Honestly, I’ve been wonking out on this stuff for a decade. If there was an easy path to taxing income, I’d know it.

  28. 32

    wl spews:

    Ok so my knowledge was a bit off. A one percent income tax with a $15,000 per person exemption would not be bad. If you made $50,000 per year you would pay $350 dollars. At $100,000 you would pay $850. At one million you would pay $9985. If you got rid of some of the local sales tax for King county that would be more palatable and more progressive. One percent of all income including dividends would add up to a significant amount, and since the tax base is different it would not screw up the property tax levies that fund other needed things.

  29. 33

    Travis Bickle spews:


    Shared sacrifice?

    Nah. Won’t fly. People want someone else to pay for it. YLB would be the first HA commenter to tell you that, usually.

  30. 34


    @32 Your knowledge is way off—mostly due to the fact that you didn’t really try to educate yourself on the issue. Furthermore, the county can’t levy 1 percent. That’s the total state regular levy maximum, which is then split up between the state and various senior and junior taxing districts.

    Cities, for example, get up to 0.36 percent maximum regular levy for general expenses, counties 0.18 percent. It’s very complicated. You might want to download and read this.