Bob Ferguson, Washington State's Attorney General, took an oath to uphold Washington state’s constitution and laws, not advance a radical political agenda. But you’d never know it judging by his refusal to accept a court ruling declaring unconstitutional the legislature’s attempt to illegally tax income from capital gains.
On Nov. 3, with the Washington State Supreme Court already scheduled to hear oral arguments in the case on Jan. 26, Ferguson filed a motion to stay a ruling issued last April by Douglas County Superior Court Judge Brian Huber invalidating the new tax.
Calling Huber’s decision "incorrect" and "at the very least debatable," Ferguson argued |"(I)t would be profoundly irresponsible for the Department [of Revenue] to fail to prepare to collect the tax in April 2023 as directed by statute."
Washington state law is unequivocal. Statutes declared unconstitutional are deemed void from the outset. They have no legal effect whatsoever and the law treats them as if they never existed.
But the elected attorney general wants the state to collect the tax from people now and decide whether it’s legal later.
On Wednesday, the Freedom Foundation’s legal team filed a brief in opposition to Ferguson’s high-handed actions.
During the 2021 session, the Legislature passed — and Gov. Jay Inslee quickly signed into law — a measure intended to punish the state’s high earners by imposing a 7 percent tax on income from certain capital gains above $250,000 a year, such as profits from stocks or business sales.
The Washington State Constitution, however, clearly states — and nearly 100 years of legal precedent supports — that such taxes must be applied uniformly and cannot exceed 1 percent without voter approval.
Backers of the tax describe it as an excise tax, but previous court decisions have consistently regarded income as property — which must be taxed at the same rate for everyone.
The Freedom Foundation, working with the Seattle law firm of Lane Powell, PC, immediately filed suit to kill the new tax, and Huber last spring sided with the organization. He wrote:
"As a tax on the receipt of income, ESSB 5096 is also properly characterized as a tax on property pursuant to that same case law. This court concludes that ESSB 5096 violates the uniformity and limitation requirements of article VII, sections 1 and 2 of the Washington State Constitution. It violates the uniformity requirement by imposing a 7 percent tax on an individual’s long-term capital gains exceeding $250,000 but imposing zero tax on capital gains below that $250,000 threshold. It violates the limitation requirement because the 7 percent tax exceeds the 1 percent maximum annual property tax rate of 1 percent."
As usual, Ferguson is playing with house money. It costs him nothing but your tax dollars to fight the Washington constitution and the consistently expressed will of the people he’s supposed to represent. Meanwhile, anyone who opposes his agenda must rely on their own resources.
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