Regarding cross-motions for a summary judgment from the Seattle Metropolitan Chamber of Commerce and the City of Seattle, the Superior Court of Washington for King County ruled that the city’s new wage tax will apply to businesses that are $ 7 million or more Spending on payroll Seattle is constitutionally permissible.
On July 6, 2020, the city passed Ordinance No. 126108, which imposes a wage tax that applies to certain companies that do business in Seattle. The tax is based on compensation paid to Seattle employees. This does not apply to companies with pay slips in the previous calendar year of less than $ 7 million – as well as a number of specially named types of companies. In response to the ordinance, the Seattle Chamber brought a lawsuit in court alleging the tax was against the state’s constitution.
In the Superior Court, the city argued that the wage tax was a constitutionally permissible excise tax on the privilege of doing business, while the Seattle Chamber argued that the tax was a tax on the payment of employee compensation by the employer and was therefore inadmissible is a tax on the employment of an employee. Highlighting the fact that the tax is levied on companies on the basis of their total wage bill and that companies are expressly prohibited from passing the cost of the tax on to employees in the form of deductions from wages, the court concluded that there was no burden on workers consists. Accordingly, the court granted the city’s motion for a summary judgment and legally ruled that the city’s wage tax is an applicable corporate excise tax granted to cities by the Washington state constitution and bylaws.
Greater Seattle Chamber of Commerce v City of Seattle, Case No. 20-2-17576-5 SEA.