Lawsuit to overturn Capital Gains Tax court date set

Nov 11, 2021
Written by wpengine

A court challenge to the ill-conceived capital gains tax has been assigned a court date of February 4, 2022. Summary judgment arguments will be made before the Douglas County Superior Court by the Opportunity for All Coalition and the state of Washington.

WR supports overturning the Legislature’s approval of a 7% capital gains tax for two reasons. First, our state constitution does not allow for the taxing of capital gains which have been ruled as “income.” Second, our constitution places a 1% cap on taxing income and that it has to be uniform – which a capital gains tax is not.

Many smaller family-owned WR member businesses depend on the eventual sale of their business as part of their retirement. For years they have poured their hard work, time, and money into building up their businesses in hopes it will be worth more than they paid for it or owe on it. These business owners have already paid many taxes for years – the Business and Occupation Gross Receipts Tax, the property tax, unemployment insurance tax, workers’ compensation tax, and have collected the state sales tax without compensation. It is wrong that they should be hit with an additional 7% tax at the end of their career.

The Douglas County Court does not have a set time for a decision, but experts expect it sometime in late February or early March. The losing party in the case will likely appeal the decision to the Washington State Supreme Court.

It is worth noting that several Washington cities have proactively passed income tax bans, most recently the City of Yakima. Additionally, the November 2 election advisory vote on capital gains showed an overwhelming 61% of state voters recommend repealing the tax.