Lisa Herbold LEG Progressive Income Tax RES D1D2 1 CITY OF SEATTLE 2 RESOLUTION __________________ 3 4 5 6 7 ..title A RESOLUTION expressing the City of Seattle’s intent to adopt a progressive income tax targeting high-income households ..body WHEREAS, Seattle is a growing and prosperous city that can offer great schools, good jobs, and 8 healthy communities for all, and yet our City faces many urgent challenges, including a 9 homelessness state of emergency, an affordable housing crisis, overcrowded classrooms, 10 education equity and racial achievement gaps, inadequate provision of mental health 11 services, and severe traffic congestion; and 12 WHEREAS, taxes are required to support the basic functions of municipal government, and the 13 tax code is as much an expression of our values as are the public goods and services we 14 choose to fund with the resulting revenue; and 15 WHEREAS, in Washington State, according to the Institute on Taxation and Economic Policy 16 (ITEP), households with incomes below $21,000 paid on average 16.8% of their income 17 in state and local taxes in 2015, whereas households with income in excess of $500,000 18 paid only 2.4%, making Washington State’s tax code the most regressive in the nation; 19 and 20 WHEREAS, this state of affairs can be attributed largely to Washington State’s long-standing 21 failure to implement any income-based tax, leaving our state and local governments have 22 been unduly and unnecessarily reliant on sales tax, property tax, business and occupation 23 tax, and other regressive taxes; and 24 WHEREAS, our upside-down tax system deepens poverty, diminishes opportunity for low and 25 middle-income families, disproportionately harms communities of color, hinders efforts Template last revised December 1, 2016 1 Lisa Herbold LEG Progressive Income Tax RES D1D2 1 toward establishing a more equitable city, and protects and reinforces the privilege of the 2 wealthy; and 3 WHEREAS, without progressive revenue tools, Seattle is in a weak position to respond to 4 federal budget cuts proposed by the Trump administration, which could eliminate 5 millions of dollars per year from Seattle’s budget for housing and human services and 6 hundreds of millions from regional transit projects; and 7 WHEREAS, Seattle’s robust economic growth has created significant wealth and opportunity, 8 but has also exacerbated the housing affordability crisis, which is compounding the 9 financial strain on low- and middle-income households; and 10 WHEREAS, the City of Seattle can pioneer a legal pathway and build political momentum to 11 enable the State of Washington and other local municipalities to put in place progressive 12 tax systems; and 13 WHEREAS, the “Trump Proof Seattle” Coalition has called for a 1.5% tax on adjusted gross 14 income in excess of $250,000 per year, estimating that this would raise over $125M 15 125,000,000 per year in the City of Seattle; and 16 WHEREAS, revenue from such a systemic change in taxation could be dedicated to lowering the 17 property tax burden and the impact of other regressive taxes; replacing federal funding 18 potentially lost through Trump budget cuts; and providing public services, including 19 housing, education, and transit; creating green jobs and meeting carbon reduction goals; 20 and 21 22 WHEREAS, in 2010 Seattle residents voted by a 63% majority in support of imposing a statewide income tax on high-income households; and Template last revised December 1, 2016 2 Lisa Herbold LEG Progressive Income Tax RES D1D2 1 WHEREAS, as there are no cities or counties currently imposing an income tax in a state that 2 does not also impose an income tax, the City of Seattle would need to establish an 3 administrative mechanism to ensure the accurate and enforceable collection of income 4 tax revenues; and 5 WHEREAS, these circumstances underscore the need for care in writing such an ordinance, and 6 also for urgency in passing it, so that this vital new revenue tool be available as soon as 7 possible; NOW, THEREFORE, 8 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEATTLE, THE 9 MAYOR CONCURRING, THAT: 10 Section 1. The Seattle City Council intends to begin consideration of a progressive 11 income tax ordinance by May 31, 2017, with the goal of Full Council passage by July 10, 2017. 12 Section 2. The Council, Executive, the City Attorney, and members of the Trump Proof 13 Seattle Coalition will work together to craft the ordinance, and may engage outside legal counsel 14 as needed. 15 Section 3. Components of this legislation that need to be determined include: 16 a. 17 b. The threshold above which income is taxed, and/or below which households are exempted 18 What types of income can and will be taxed; from the tax; 19 c. At what percentagerate (s) income is taxed; 20 d. The details of the distribution use of the revenue so raised; and 21 e. The administrative mechanisms to ensure the accurate and enforceable collection of income 22 23 24 tax revenues. Section 4. The guiding principle in crafting this legislation will be to chart the strongest possible progressive income tax model, to exercise fully the City’s local authority, and to provide Template last revised December 1, 2016 3 Lisa Herbold LEG Progressive Income Tax RES D1D2 1 robust progressive revenue tools for municipalities throughout Washington State. In making 2 decisions about the aforementioned components of legislation, legal viability will be the primary 3 consideration. 4 Template last revised December 1, 2016 4 Lisa Herbold LEG Progressive Income Tax RES D1D2 1 Adopted by the City Council the ________ day of _________________________, 2017, 2 and signed by me in open session in authentication of its adoption this ________ day of 3 _________________________, 2017. 4 ____________________________________ 5 President ____________ of the City Council 6 The Mayor concurred the ________ day of _________________________, 2017. 7 ____________________________________ 8 Edward B. Murray, Mayor 9 Filed by me this ________ day of _________________________, 2017. 10 ____________________________________ 11 Monica Martinez Simmons, City Clerk 12 (Seal) Template last revised December 1, 2016 5