Freedom Foundation sues Seattle over tax targeting the ‘rich’

Freedom Foundation sues Seattle over tax targeting the ‘rich’
The Freedom Foundation is suing the city of Seattle over its new tax that targets a single filer making more than $250,000 or joint filers who make more than $500,000. (Dan Callister/Newsmakers)

The Freedom Foundation, a national think tank based in Washington state that promotes limited government and free enterprise, sued the city of Seattle on Wednesday over the city’s newly passed income tax that targets the rich, Fox News reported.

The tax, which the City Council passed in July, requires city residents to pay an additional 2.25 percent income tax if they are a single filer making more than $250,000 or joint filers who make more than $500,000. Unlike most states, Washington does not have a personal income tax.

According to the Freedom Foundation’s lawsuit, which was filed on behalf of several Seattle residents, the tax is unconstitutional.

In 1951, the Washington Supreme Court issued a ruling “to invalidate the state income tax,” Fox News said. “Further, a law passed in 1984 prohibits any city or county from levying a tax on net income.”

Washington “imposes strict limits on taxes; prohibits taxes on net income; and requires cities to get permission to tax residents,” in the Revised Code of Washington, which encompasses all state laws, Fox News reported.

“This is clearly bad policy and illegal, but it’s also an assault on the rule of law,” David Dewhirst, a lawyer for the Freedom Foundation, told Fox News in a statement. “If they can get away with it this time, where does it stop?”

The goal of the city’s new tax “is to replace our regressive tax system with a new formula for fairness while ensuring Seattle stands up President [Donald] Trump’s austere budget that cuts transportation, affordable housing, health care and social services,” outgoing Democratic Mayor Ed Murray said.

Seattle anticipates $140 million in additional revenue once the law is implemented. The initial set up, however, will cost between $10 million and $13 million. The law is expected to cost an additional $6 million annually to enforce compliance.

The city plans to use the additional revenue for affordable housing projects and additional services for low-paid workers.

“We will no longer tolerate a system that buries poor and working class people in taxes, while giving big business and the super rich yet another free ride; a system that underfunds affordable housing to the point where thousands are homeless, a system that criminally underfunds education,” Councilmember Kshama Sawant told Fox News last month.

On nine different occasions, voters have turned down the idea of adding an income tax.

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