Full Breakdown
Washington State's Millionaires Tax Faces Legal Challenge
4/21/2026, 11:53:56 PM
Overview of the New Tax Legislation
Washington state has enacted a new income tax targeting high earners, specifically a 9.9% tax on individual and household incomes exceeding $1 million. This legislation, signed by Governor Bob Ferguson on March 30, 2023, marks a significant shift for a state that has historically resisted income taxes, following a 1933 Supreme Court ruling that classified income as property and limited income tax rates to 1%.
Legal Challenge and Opposition
The new tax has already sparked a legal challenge led by Curt Nuccitelli, owner of Spirit Transport Systems, who argues that the tax could adversely affect small businesses like his. Nuccitelli contends that his business profits are taxed as personal income, which could limit his ability to invest in employee wages and business growth. He stated, "Washington state is already very unfriendly to small businesses, as far as taxes go."
Jackson Maynard, an attorney with the Citizen Action Defense Fund (CADF), which is involved in the lawsuit, emphasized that the tax violates the state constitution by not adhering to the uniformity requirement. He believes the lawsuit presents a "strong argument" against the tax based on established legal precedents.
Legislative Intent and Strategy
Documents obtained by The Center Square reveal that the tax was designed as a test case to challenge the 1933 Supreme Court ruling. Senate Majority Leader Jamie Pedersen, who sponsored the bill, acknowledged in an email that the intent was to force the Washington Supreme Court to reconsider its stance on income taxation. Pedersen defended this approach by comparing it to legislative strategies used in other contexts, such as challenges to Roe v. Wade.
The Washington Attorney General's Office, while providing legal advice to lawmakers, has stated that it will defend the constitutionality of the new tax in court. Deputy communications director Mike Faulk expressed confidence in prevailing in legal challenges.
Criticism of the Tax and Legislative Process
Critics, including Maynard, have voiced concerns over the perceived collusion between the legislature and the Attorney General's Office to circumvent constitutional limitations. They argue that the AG's role should be to uphold the constitution rather than assist in efforts to challenge it. Maynard expressed alarm over the findings, stating, "The Attorney General’s role is to defend the constitution, not help the legislature find ways to violate it."
What's Next?
As the legal battle unfolds, the future of the millionaires tax remains uncertain. Should it withstand judicial scrutiny, the tax could significantly alter Washington's tax landscape, impacting not only high earners but potentially small businesses as well.
Verbatim Quotes
- "If I give them a dollar an hour raise, that's over $2,000 by the end of the year, so it really limits my ability to continue to grow my company and pay my team a livable wage." — Curt Nuccitelli, Owner, Spirit Transport Systems
- "Our state's constitution is really clear that if you're gonna have an income tax, it's got to be capped at 1%, and it's gotta apply evenly to everybody in the state." — Jackson Maynard, Attorney, Citizen Action Defense Fund
- "I would like to force the Washington Supreme Court to reconsider its caselaw that considers income to be property." — Jamie Pedersen, Senate Majority Leader
- "The Attorney General’s role is to defend the constitution, not help the legislature find ways to violate it." — Jackson Maynard, Executive Director, Citizen Action Defense Fund
