The decision by the Washington Supreme Court to allow the state to collect the capital gains tax before a final ruling on its constitutionality is made next year has been widely criticized by policy think tanks.
The Northwest Progressive Institute, which praised the court's decision, noted that it was a victory for right-wing groups that wanted to keep the state's tax code in disarray.
Aaron Withe, the CEO of the Freedom Foundation, criticized the state's attorney general for trying to collect the capital gains tax. He claimed that the effort wasted taxpayer funds.
In a statement, Withe noted that the actions of Attorney General Bob Ferguson were causing confusion and chaos in the state. He claimed that it was unnecessary for the state to spend tax dollars on fighting the constitution of Washington.
The new tax, which was aimed at the state's wealthiest residents, is 7% on capital gains over $250,000 annually. It applies to the profits from the sale of stocks or business activities. Some exceptions include the sale of livestock and real estate.
Opponents of the tax claimed that it was unconstitutional, and a lawsuit was filed in Douglas County Superior Court to challenge its enforcement.
The judge who heard the case, Brian Huber, ruled on March 1 that the tax was properly considered a property tax and a graduated tax.
The Supreme Court of Washington agreed to review the case on July 13. At Ferguson's request, the court decided to bypass the Court of Appeals.
On November 3, the attorney general asked the Supreme Court to allow the Department of Revenue to collect the capital gains tax before a final ruling regarding its constitutionality is made.
The state's lawmakers then advised the Department of Revenue to stop implementing the capital gains tax before the court issued its final ruling. They noted that the proposed rule should only be labeled as an advisory document.
Ferguson then asked the court to allow the state to collect the capital gains tax before a final ruling regarding its constitutionality is made. The court agreed, and the first payments were scheduled to be made on or before April 18, 2023.
Jackson Maynard, the executive director of the Citizen Action Defense Fund, was not pleased with the court's decision. However, he noted that the court's ruling was a silver lining.
Despite the court's decision, Maynard noted that the state was required to follow proper procedures in order to comply with the court's ruling. He also praised the group for urging the Department of Revenue to file a motion to stay the trial court's ruling.
The Washington Policy Center maintained that the state was playing a game by referring to the capital gains tax as an excise tax. If the Supreme Court ruled in favor of the tax in January, it would cause Washington to lose its competitive advantage. On the other hand, think tank representatives from different organizations traded barbs on Twitter.
In response, Jason Mercier of the Washington Policy Center noted that the IRS and other agencies should also refer to the capital gains tax as an income tax. He included an advisory letter he received from the IRS.
The NPI's Twitter account was very amusing to see how quickly Jason responded to the news. It noted that he had been continuously posting variations of the same message on his blog in an attempt to get the results he was looking for. Unfortunately, his efforts were not working.
The Mountain States Policy Center also used its Twitter account to call out the various terms used to describe the capital gains tax.
The case involving the state of Washington and Chris Quinn will be argued before the state Supreme Court on January 26, 2023.
The preceding is a summary of an article that originally appeared on Washington Examiner.