Mayor Ed Murray deserves credit for taking a bold position in declaring Seattle a “sanctuary city” and resisting the ruthless immigration-enforcement policies threatened by the new administration. This principled position could cost Seattle $85 million per year in federal funding, which means cuts to services that poor people need. So at the same time that we are buckling down to resist Trump’s draconian immigration policies, we also need to be thinking about new sources of revenue. Otherwise, we will only widen the gap between the haves and have-nots in this city.
Much as we want to deny it, Seattle is becoming a playground for the ultra-wealthy. Seattle now ranks as the fifth most expensive city in the U.S. and ninth most expensive city in the world to live in. This has dire consequences for those who are economically vulnerable.
According to data produced by the Institute on Taxation and Economic Policy (ITEP), Washington has the most unfair state and local tax system in the country. Families earning the lowest 20 percent in household income pay seven times more in taxes, as a percentage of their income, than the top 1 percent. While we tap out poor people with high sales tax and the middle class with ever-increasing property taxes, we have no mechanism to capitalize on the massive wealth flowing into our city and state. We are one of only nine states in the country that does not tax unearned income (capital gains, interest and dividends from stocks.) And we are one of only seven that does not tax ordinary income. The others are: Florida, Texas, Nevada, South Dakota, Alaska and Wyoming, mostly red states.
In Murray’s recent State of the City, he proposed absorbing a possible withdrawal of federal funds with a property tax levy that he said would raise $55 million dollars per year for five years. This levy is business as usual, the city’s go-to response whenever it needs to raise revenue. While property taxes are not as regressive as sales tax, they are still a far cry from progressive, as the wealthiest people still pay much less of their income than everyone else.
A couple months ago, Real Change joined a coalition being coordinated by the Transit Riders Union and Economic Opportunity Institute to “Trump Proof Seattle.” The coalition has called for the City Council to consider a 2.5 percent tax on unearned income for households earning more than $250,000 a year. This will affect fewer than 10 percent of Seattlites, and yet it will raise $100 million per year in critical revenue.
Yes, there will surely be legal challenges to an ordinance that taxes unearned income. Opponents will cite the 1933 state Supreme Court decision declaring any income tax unconstitutional and will challenge the scope of the city’s taxing authority.
But the inevitability of a legal challenge is not a reason to withdraw. In fact, it’s the very reason to proceed. By passing a tax based on income, the city of Seattle can start the legal process and build the momentum and political will to finally make a statewide progressive income tax possible.
This is a time for Seattle to act boldly and do everything in our power to resist Trump.
The hundreds of vendors at Real Change are a small fraction of all those whose lives depends on essential safety-net services that are at stake. Please take a minute to call your councilmember and demand that they support a progressive plan for new revenue.
Tell them that it’s one thing to say Seattle needs to be a city for everyone, not just the rich; but that now it’s time to walk the talk.