OLYMPIA, Wash. — Washington’s newly approved “millionaires tax” is facing its first legal challenge even before the law takes effect, setting up what could become a major court fight over whether the state can impose an income tax.
The lawsuit, filed by the Citizen Action Defense Fund, argues the new tax violates Washington’s constitution. The legal challenge is being led by former Washington Attorney General Rob McKenna and former state Supreme Court Justice Phil Talmadge.
The so-called millionaires tax creates a 9.9% tax on income above $1 million, but does not tax income below that threshold, which challengers say is unconstitutional.
“For nearly a century, Washington courts have been clear: income is property, and property taxes must be uniform and limited,” said Rob McKenna. “This law disregards both the plain language of the Constitution and decades of consistent Supreme Court precedent. We are confident the courts will strike it down,” McKenna said in a Thursday news release.
The bill was passed by Democrats last month without Republican support.
State leaders say the tax could bring in more than $3 billion a year once it kicks in.
“When Washingtonians hear the benefits that flow to working families, to businesses large in small, to kids in schools with those free meals, it is going to make a huge, huge difference,” Gov. Bob Ferguson said when he signed the bill into law.
Supporters say the tax targets fewer than 1% of households while funding schools, health care, and tax relief.
But opponents argue it opens the door to a broader income tax.
“This is not about, as one of the speakers said, hope and change. There’s a lot of fear about this tax,” said Citizen Action Defense Fund Executive Director Jackson Maynard.
The lawsuit, filed in Klickitat County Superior Court, seeks to invalidate the tax entirely.
The tax is not set to take effect until 2028. Meanwhile, critics are also pushing a repeal effort that could put the law before voters as soon as this year.