On Monday, Seattle Mayor Ed Murray and Councilmembers Kshama Sawant and Lisa Herbold unveiled a joint proposal to begin shifting Seattle to a more progressive and sustainable tax structure, through a 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.
According to officials, 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 Trump’s budget cuts, enhance public services such as housing, education, transit, and/or create green jobs while meeting the City’s carbon reduction goals.
“Washington state’s tax structure is the most regressive in the country, putting the burden on many of our most vulnerable residents,” said Murray. “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 – human services, education, affordable housing and reliable transit. This remains one of the major shortcomings of our city and state, and it is finally time to fix it.”
“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,” said Sawant. “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. Our movement will continue to organize in our interests, against big business and the super rich, to make Seattle affordable for all.”
“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,” said Herbold. “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 (ITEP) 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.
“Households with incomes below $21,000 are paying, on average, 16.8 percent of their income in state and local taxes, while those with incomes above $500,000 pay just 2.4 percent said John Burbank, Executive Director of the Economic Opportunity Institute, which co-leads the Trump Proof Seattle Coalition. “It is reasonable for Seattle’s wealthiest residents, who currently pay the lowest tax rates, to pay a little more to make Seattle a better place for everyone – including themselves – to live, work, raise a family and do business.”
The City Council will conduct an initial public hearing regarding this proposal on June 14. It is anticipated City Council will take final action by mid-July.
