Douglas County Superior Court Judge Brian C. Huber heard arguments Friday on challenges to the state’s capital gains tax. He says he’ll issue a written ruling in a few weeks. Eventually, we expect that the case will end up with the state Supreme Court, but there are processes to be followed.
The Olympian reports,
A Washington state Superior Court judge in Douglas County heard oral arguments Friday in the case to determine whether the state’s capital gains tax is an excise tax or an income tax, which is unconstitutional in the state. Two lawsuits were filed against the state: Clayton v. Washington and Quinn v. Washington. Both have joined together. Washington Solicitor General Noah Purcell led with opening arguments. He said that every theory that a capital gains tax is unconstitutional presented by the plaintiffs has previously been struck down by the Washington State Supreme Court and the U.S. Supreme Court. He said the court should uphold precedent and the law enacted by the legislature.
And then the counter:
Rob McKenna, former Washington State Attorney General, argued on behalf of the plaintiffs that the legislature had adopted another “excise tax workaround,” and said measures similar to this have been tried and rejected before. Under federal law, capital gains are characterized as income tax, he said. “Although indistinguishable in every way from the federal income tax on which it’s modeled, the legislature has labeled the new capital gains tax an excise tax,” McKenna argued. “This is not the first time the legislature has attempted to evade our constitution’s limitations on income taxes and property taxes by relabeling them excise taxes,” he said.
Jason Mercier of Washington Policy Center has links to briefs filed in the case.