The notion of a wealth tax is often associated with some of the more social-democratic countries of Europe, but is being proposed in a part of the US.

A political row has broken out in the US northwest around a proposed wealth tax on those earning more than $250,000.

Seattle’s city government is proposing to slap a 2.25 per cent tax on anyone earning more than $250,000 or above $500,000 for couples filing jointly. The measure would hit around 9,000, or 2 per cent, of taxpayers in the city, according to the Wall Street Journal.

The proposal has been challenged by the Freedom Foundation, a Washington State-based libertarian think tank campaigning to rein in tax-raising powers. On its website, the organization said: “The law - passed unanimously by the council members in early July – is illegal for many reasons. For starters, Washington cities lack the authority to impose these types of taxes.  Moreover, they explicitly may not enact net income taxes. This tax also violates Seattle's charter because this issue should have been decided directly by the people. These statutory and charter violations must be addressed well before any court gets to the several constitutional problems with the law.”

Wealth taxes aren’t common in the US and more likely in the public mind to be associated with measures in Europe. Sweden, for example, had a wealth tax (it subsequently got rid of it); France enacted a wealth tax on incomes over €1.3 in 2011, dubbed a “solidarity tax”. It has been cited as a reason for why so many wealthy French citizens have migrated to the UK. Arguably, property taxes are a form of wealth tax.

A report by the WSJ said another separate group called the Opportunity for All Coalition, founded by Seattle venture capitalist Matt McIlwain, filed a lawsuit on the same day (Wednesday) as the Freedom Foundation.

Backers of the tax welcome the suits, because they believe a court ruling in favor of the tax will pave the way for a statewide income tax. Washington is one of seven states in the country, including Florida, Texas and Wyoming, without an income tax.

Wealth taxes are sometimes called for at time when, as is allegedly the case at present, inequalities of wealth and income are seen as unacceptably high. Opponents claim they are unaccepable assaults on economic liberty and raise relatively little income, sometimes causing more money to collect than is actually raised. Such measures also, critics say, encourage tax avoidance and when imposed at a local level, encourage wealthy persons to migrate.