Seattle passes new tax on wealthy residents

Seattle’s city council unanimously passed an income tax on the city’s wealthiest residents on Monday but will likely face a legal challenge over violating state law.

The measure applies a 2.25 percent tax on total income above $250,000 for individuals and above $500,000 for married couples filing taxes together, Reuters reported Tuesday. The tax would affect fewer than 20,000 residents, out of the city’s population of more than 660,000.

Seattle Mayor Ed Murray (D) said proceeds from the tax could be used to pay for transit services and affordable housing.

ADVERTISEMENT
"Our goal is to replace our regressive tax system with a new formula for fairness, while ensuring Seattle stands up to President Trump's austere budget that cuts transportation, affordable housing, healthcare, and social services," Murray said in an email, according to Reuters.

The tax will add $140 million in new annual revenue, and the city estimates that the tax would cost $10 million to $13 million to set up, plus $5 million to $6 million per year to manage, The Seattle Times reported.

Six other U.S. states have a tax on personal income and no other Washington city has an income tax.

State law bars counties or cities from taxing net income, though net income is not defined in the statute, so Seattle might say taxing total income is different from taxing net income.