(The Center Square) – The Washington attorney general and Democratic leaders plotted how to overturn a nearly century-old decision that banned income taxes in the state, writing they want to force the state Supreme Court to reconsider its 1933 decision, nearly 1,000 pages of public records obtained by The Center Square show.
“I would like to force the Washington Supreme Court to reconsider its caselaw that considers income to be property," Senate Majority Leader Jamie Pedersen, D-Seattle, who sponsored SB 6346, wrote in an email on Aug. 27
The bill that Gov. Bob Ferguson, a Democrat, signed into law March 30 imposes a 9.9% income tax on residents earning more than $1 million, but a lawsuit has been filed to block its implementation.
Jackson Maynard, executive director and counsel at Citizen Action Defense Fund, which is suing to overturn the tax, wrote in an email to The Center Square that he has concerns about the conversations between the staff in the attorney general's office and lawmakers.
"I haven't reviewed any of these documents, but based on what you're telling me, I'm a bit alarmed," he wrote. "The Attorney General's role is to defend the constitution, not help the legislature find ways to violate it."
The Center Square obtained 988 pages of records that included communication between Washington State Attorney General’s Offices leadership and staff, and state legislators, regarding efforts to overturn the 1933 state Supreme Court decision declaring individuals' income to be their property. If the 1933 ruling is overturned, a simple majority vote in the Washington state Legislature would allow lawmakers to enact a progressive income tax imposed on every Washington earner.
The 1933 Culliton decision declared that a state progressive income tax is unconstitutional for violating the 1930 14th Amendment to the state constitution that requires all property taxes be uniform by class and that property was “all things tangible and intangible, subject to ownership.” Since Culliton, the state Supreme Court has unanimously ruled that income is property under the 14th Amendment’s definition.
Despite lawmakers having their own legal counsel, the AGO had previously told The Center Square that it is appropriate for them to give the legislative branch legal advice.
AG staff and Pedersen did not immediately respond to requests for comment about the records.
The Department of Revenue will not begin collecting revenue from the tax until 2028.
Overruling the ruling
In a Dec. 6 email, Pedersen sent a draft of the millionaire’s tax bill to Solicitor General Noah Purcell, saying “I welcome your thoughts and comments about what will give us the best shot to have Culliton overruled.”
Purcell wrote back suggesting an emergency clause to try to thwart a referendum to overturn the law if passed.
“I did not see an emergency clause,” he wrote on Dec. 11. “Without one, someone could try to subject the bill to a referendum. It should not be subject to referendum because it raises revenue, but under the Secretary of State’s longstanding practice, they only reject proposed referenda if the bill has an emergency clause, so someone would have to sue to prevent a referendum on the bill as written. I just wanted to make sure you were aware of that.”
The Citizens Action Defense Fund is currently in a legal fight with the Secretary of State’s Office after it refused to process a referendum seeking to overturn the millionaire’s tax.
The millionaire's tax has been touted publicly by proponents as a way to fund certain programs and provide tax relief to small businesses and lower income Washington families.
However, AGO Senior Counsel Chuck Zalesky wrote in a Jan. 19 email to Purcell that “the overall legislative goals, it seems to me, are to have our Supreme Court overturn Culliton v. Chase.”
While key legislative leadership has refrained from saying whether the tax rate or threshold will change, in his Aug. 27 email, Pedersen said regarding the tax that “I’d like to start with a rate of 9.99%.”
Legal advice on tax
Although Pedersen initially described it as an excise tax, Zalesky advised against it in a Jan. 7 email to Purcell.
“I wouldn’t monkey around with trying to characterize it as an excise tax,” he wrote. “That will only make the Leg. seem disingenuous. Instead, tee it up as a test case to try to get the ‘income = property’ line of cases overruled.”
Some AGO attorneys also advised removing a marriage penalty provision in the bill. A marriage penalty is when a higher tax rate applies to the lower-earning spouse when a married couple files jointly.
Senior Assistant Attorney General Dan Jensen wrote that "the better course is to eliminate it so that the case can focus on Culliton.”
Jensen had previously critiqued the bill language in a separate Jan. 21 email, writing “overall, we have concerns with crafting a tax with provisions this complicated if the intent of the bill is to overturn the Culliton decision.”
A 1930 voters pamphlet contains an argument in favor of the 14th Amendment on the basis that it was necessary to shift the tax burden from land to other forms of property, such as income from stocks and bonds, by enabling the state to tax them as different classes of property.
In 2023, the state Supreme Court ruled that a state tax on the income derived from the sale of capital gains was legal because the state Legislature called it an “excise tax," which is imposed on the transaction regardless of whether income is derived from it.
The Center Square also obtained the AGO’s Dec. 11 legal memo written by Zalesky and Jensen to Ferguson’s Office regarding the legality of a hypothetical tax on high-income earners he was contemplating, stating “the proposed tax would fall squarely within the type of taxes that our Supreme Court has invalidated under the uniformity and levy limit requirements of article VII, sections 1 and 2, of the Washington Constitution.
“We believe there is a reasonable chance – although far from a sure thing – that the Supreme Court would overrule its prior ‘income is property’ precedent if the issue was directly and necessarily before it,” the memo concludes.
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