Do Washingtonians “own” their income?

: Do Washingtonians “own” their income?
A day after the Washington Supreme Court overturned legal precedent concerning property rights, the city of Seattle petitioned the high court to do the same regarding the 80-year prohibition on a progressive income tax. Photo: freepik.com

A Washington Supreme Court ruling last week involving a city of Seattle rental ordinance overturned a century of property case law. Now, the city of Seattle wants the high court to take the same position regarding the 80-year legal precedent prohibiting a statewide progressive income tax.

The Nov. 14 landmark ruling upheld a “first-in-time” requirement for Seattle landlords, which means landlords must accept the first qualified rental application they receive for a lease. Seattle’s petition, filed the day after that ruling, argues that the court should disregard precedent as it did in its “first-in-time” law regarding property rights.

“The Court should make clear that…income is not “property” for tax purposes,” the petition states. “The City has authority to impose an income tax. The scope of city taxing power is particularly significant and of public importance as cities struggle to provide needed services to their residents. This Court can right the ship, reverse decisions that were wrong when decided and wrong today, and reconcile inconsistencies in its constitutional jurisprudence.”

Washington Policy Center Government Reform Director Jason Mercier told Lens that “what the Supreme Court did last week is incredibly concerning. It signals that they don’t have any hesitation about getting rid of a century of case law.”

The main point of dispute is Since 1933, the state high court has concluded income meets the constitution’s definition; a 1951 State Supreme Court ruling declared: “it is no longer subject to question in this court that income is property.”

“Each time they were asked to overturn this (precedent), they said ‘no,’” Mercier said. “A week ago, I was at about a 95-percent confidence level this was going to go the same way it has for almost a century. Many cases they just totally disregarded…it gives you a little concern. But there are distinctions between those cases.”

He added that Washington voters have also rejected progressive income tax proposals six times. “What this all comes down to is an effort to use the court to do something that the sovereigns of the state won’t – and that’s what so fundamentally wrong in my opinion about this whole effort.”

Although the city argues that “the majority of other courts correctly hold that an income tax is not a property tax,” both lower court rulings sided against Seattle’s ordinance – though on separate legal grounds. A 2017 King County Superior Court ruling determined that the tax was illegal on statutory grounds alone for violating a 1984 state law prohibiting local income taxes. However, the Court of Appeals decision earlier this year concluded that although the city’s tax was unconstitutional, so was the 1984 state law. A legal team representing the plaintiffs unsuccessfully petitioned the Court of Appeals to reconsider its ruling.

One of Seattle’s arguments is that the original 1933 court ruling establishing income as property was fundamentally based on a prior court decision that was later overturned. It was on a similar basis the high court reversed prior rulings on property case law with Seattle’s “first-in-time” ordinance. Further, other states and the federal government do not define income as property.

However, Mercier says those points are all moot. “There’s no federal court ruling…that will tell you the words of Washington’s constitution defining property as everything subject to ownership. This is really a simple question: do you own your income? If you do, that’s where this entire case stops.”

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