Seattle wants to tax the rich so the poor can afford to live there

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Amid the mansions of tech billionaires and millionaires, the luxury stores and upscale eateries, Seattle is having an existential crisis.

There’s a deepening wealth gap and housing costs are soaring beyond the reach of many working people, including software engineers whose salaries average $120,000 a year (and those are U.S. dollars). And the question that’s being asked is: Is this a city only for the wealthy?

Sound familiar? Well, yes. But the solution that Seattle’s city council is trying is far more daring than anything politicians here have been willing to try.

Seattle council took the audacious step Monday of unanimously voting for an income tax that would apply only to the rich.

The 2.25 per cent income tax would be levied on individuals earning $250,000 a year or more, and on couples whose annual income is $500,000 or more.

Seattle has the fourth-highest tax burden for families earning $25,000 among 51 other urban centres, according to a report done by the chief financial officer for the District of Columbia. It is ranked fifth in the United States for its number of millennials earning more than $350,000 a year and is home to six Fortune 500 companies.

Whether Seattle’s tax is ever implemented remains to be seen. There is a civic election in November and the mayor’s chair and half the council seats are up for grabs.

The bigger question, though, is whether it’s legal. Already opponents have said they’ll take it to court arguing that it violates both Washington state law and the state’s constitution.

No city in Canada can or has tried to levy income taxes, but 14 American states give cities that power.

Of course, Washington is one of only seven states without either personal or corporate income taxes. Its revenue comes from so-called “regressive” taxes, which are not based on income. As a result, the poor often pay as much or more in tax than the wealthy do.

The city estimates the income tax would raise about $140 million a year, which would be used to address homelessness, provide affordable housing and transit, meet carbon-reduction goals and create green jobs.

But the whole point of Seattle’s plan isn’t just that the council wants to do the right thing for its citizens. It is to upset the status quo.

The city is “challenging this state’s antiquated and unsustainable tax structure,” Mayor Ed Murray said in a tweet earlier this week. “Our goal is to replace our regressive tax system with a new formula for fairness.”

Among the supporters quoted in the Seattle Times was software developer Carissa Knipe, who said she earns more than $170,000 a year.

“Seattle should serve everyone, not just rich folks,” she said. “I would love to be taxed.”

Although Seattle is known as the home of Bill Gates, Jeff Bezos, Paul Allen and at least five other billionaires, as Times reporter Danny Westneat pointed out, they don’t live in the city. They live in the suburbs that are not part of the city proper.

The ‘tax-the-rich’ campaign was launched earlier this year by a group called Trump-Proof Seattle. Both inside and outside the council chamber, supporters carried signs and chanted ‘Tax the rich,’ according to the Seattle Times.

Former Microsoft CEO Steve Ballmer does live in Seattle and he’s opposed to the tax, telling KIRO Radio that it would “cause people to think about moving jobs elsewhere.”

Seattle began pushing into city-state territory several years ago when it signed into law a minimum wage. (It’s now $15 an hour in 2017 — a salary the mayor acknowledges still isn’t enough to live on in the increasingly expensive city.)

But more interesting than the politicians’ attempts to seize more power is the mobilization of well-educated and well-organized millennials.

Clearly, growing unease over wealth inequality and fears of being left behind aren’t limited to the industrial rust belts and rural backwoods described in J.J. Vance’s Hillbilly Elegy and exploited by Trump.

It’s in Seattle and here as well. It was an underlying factor in the B.C. Liberals’ defeat — something that Premier Christy Clark acknowledged in the postelection throne speech that renounced her party’s platform as well as her government’s tax policies, close ties to wealthy donors, and cuts to education and social programs.

It’s a lesson that the progressives at Vancouver’s City Hall may still need to learn.

The majority recently voted grudgingly after lengthy public hearings to deny a rezoning in Chinatown for yet-another condo tower — albeit it one with five units of subsidized housing.

Far from embracing the concerns of younger citizens as their Seattle counterparts did, Mayor Gregor Robertson and his colleagues singled out and scolded the millennials who had spoken out forcefully and sometimes tearfully at public hearings about the lack of affordable housing and the destruction of unique neighbourhoods.

Their elected representatives accused them of having acted like a mob.

This article originally appeared in the Vancouver Sun.