One of the questions surrounding the city of Seattle’s 2017 income tax ordinance is what the city council was told by City Attorney Peter Holmes in a 2014 legal memo about the idea when it was first proposed.

Following a recent settlement between the city and the Washington Policy Center, the legal memo has been released. In it, Holmes came to the same conclusion as the tax’s critics, detractors and lawsuit plaintiffs: a “millionaire’s tax” is indeed an income tax, regardless of whether the council called it an “excise tax,” and is therefore a violation of the state constitution.

After the memo was released, WPC Government Reform Director Jason Mercer wrote that “in short, city attorneys made it very clear that Seattle was restricted from imposing an income tax by law and the constitution. Yet they did it anyway. And they continue to spend taxpayer dollars on their misguided political effort to get the Court to go around the people and allow for graduated income taxes where they’ve been prohibited for almost a century.”

The revelation helps explain many of the peculiarities surrounding the legal defense in the lawsuit. When Seattle filed a motion for a summary judgment in the case, rather than have Holmes sign it the city hired Pacifica Law Group, LLP. The city also fought efforts to have the legal brief released.

The 2014 memo is addressed to then-Councilmember Nick Licata, who later told the Seattle Weekly “whatever we got from the law department, I doubt whether it would be pro income tax.”

After the 2017 ordinance was passed, it was challenged in court. A King County Superior Court decision later that year ruled it unconstitutional on statutory grounds, and the State Supreme Court declined to review the case.

At the heart of the lawsuit is the desire by some to make it legal for the state to impose a graduated or progressive income tax. The state approved such a tax in the 1930s, but it was ruled unconstitutional by the State Supreme Court in 1933 for violating the state Constitution’s requirement that property taxes be uniform, or a flat rate. Article VII in the state Constitution defines property to “include everything, whether tangible or intangible, subject to ownership.”

During an April 18 WPC meeting, former state attorney general and gubernatorial candidate Rob McKenna remarked that the provision, “as one Supreme Court opinion said, ‘is about as broad a definition of property as we can imagine.’”

As a result, a statewide income tax is constitutional only if it is imposed at a flat rate and does not violate the state’s one percent property tax cap. Since the 1933 ruling, the high court has upheld its original position on income as property every other time the issue has been before it. A 1951 high court ruling concluded “it is no longer subject to question in this court that income is property.”

If Washingtonians want a progressive income tax, “one way to address this is to amend the constitution,” McKenna said. It’s the same advice given by the state Supreme Court in a 1961 decision.

However, Washington voters have repeatedly rejected a proposed graduated income tax – the latest in 2010 with Initiative 1098. Since then, some progressive income tax advocates have sought to get a test case in front of the current state Supreme Court in the hope that the justices would overturn the 86-year legal precedent.

The idea of creating an income tax for that very purpose was originally suggested to the Olympia City Council, but after they rejected it, supporters in 2016 filed a ballot measure via Measure 1. However, local voters decisively rejected it, and a court ruling later invalidated it. Afterwards, advocates brought the idea to the Seattle City Council as a way to “Trump proof” the city.

The 2014 legal memo acknowledges that “there is some debate about whether the current court would overturn these cases, but the law today is that an income tax is an unconstitutional property tax.”

The memo also undermines an argument that even if it is an income tax, cities have “broad authority” when it comes to taxation. Not only does a 1984 state law explicitly prohibit local governments from imposing an income tax – graduated or not – but the memo says “a city must have express authority, either constitutional or legislative, to levy taxes.”

Nevertheless, several Seattle state lawmakers filed a brief with the high court requesting it take up the constitutional question, as did the Association of Washington Cities.