Washington "millionaires" tax hit with lawsuit
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A lawsuit filed Thursday challenges Washington state's new income tax on high earners as unconstitutional.
Why it matters: The legal challenge, which had been widely anticipated, could stop the tax from taking effect.
- It could also cause Washington's highest court to revisit past rulings allowing only a flat income tax in the state.
Catch up quick: The new income tax — dubbed a "millionaires tax" by supporters — imposes a 9.9% tax on annual income exceeding $1 million, beginning in 2028.
- Gov. Bob Ferguson signed the measure into law March 30.
Zoom in: The new lawsuit, filed Thursday in Klickitat County Superior Court, alleges the Legislature "ignored the constitutional restraints" on its taxing power when approving the bill.
- Past state court rulings have found that income is property — and the state constitution says property must be taxed at a uniform rate, not exceeding 1% of the property's value.
The lawsuit's plaintiffs include married couples and individuals who expect to pay the tax, as well as groups representing small businesses and the construction industry.
What they're saying: "This law disregards both the plain language of the constitution and decades of consistent Supreme Court precedent," Rob McKenna, a former Republican state attorney general who's helping represent the plaintiffs, said in a news release Thursday.
The other side: Democratic lawmakers who backed the tax say the state Supreme Court could overturn past rulings classifying income as property.
- "We will be defending the constitutionality of this law in court and expect to prevail," Mike Faulk, a spokesperson for state Attorney General Nick Brown, wrote in an email to Axios.
What's next: The case is likely to end up before the Washington Supreme Court — although it's unclear how long it might take to get there.