
Jason Mercier of the Washington Policy Center offers reactions from around the state on the state Supreme Court decision on the capital gains income tax
Jason Mercier
Washington Policy Center
When an earthquake strikes it can take days, weeks, or even years to understand the full scope of what happened. This is also true of a court ruling that changes the entire tax landscape of a state. With that in mind, here is some of the early response to last week’s shocking 7-2 state Supreme Court decision ruling that a capital gains tax is an excise tax even though the rest of the world says that it is an income tax:

- Tacoma News Tribune: “Legal arguments are fun and all. But if you’re clinging to dusty precedents and semantics in defense of a system that benefits the wealthy at the clear expense of everyone else, that’s not constitutional righteousness — it’s just deluded indifference. Or maybe something worse.”
- KUOW: “A wealth-management company says it’s pulling its headquarters out of Washington state in the wake of the state’s Supreme Court decision around capital gains taxes. In a seemingly sarcastic statement, Fisher Investments says: ‘In honor of the Washington State Supreme Court’s wisdom and knowledge of the law, and in recognition of whatever it may do next, Fisher Investments is immediately moving its headquarters from Washington state to Texas.’ The move is expected to be completed by June 30 . . . Fisher is now part of a wave of companies relocating to Texas. That state has fewer business regulations, no income taxes, and lower costs of living.”
- Forbes op-ed: “Ryan Ellis, an IRS-enrolled agent and president of the Center for a Free Economy, says the majority opinion is ‘absurd.’ ‘An excise tax is a government tax on the sale of a thing, usually a Pigouvian thing. Booze, beer, tobacco, etc.,’ adds Ellis. ‘No serious tax expert would call the realization of a capital gain an occasion for an excise tax. It’s clearly in the income tax bucket.’”
- Tax Foundation: “Words matter — at least they’re supposed to, notwithstanding the court’s conclusion that a tax on income is not an income tax — so it is necessary to delve into the somewhat strange verbiage of Washington’s constitution, along with the linguistic gymnastics the court performed to endorse a tax on capital gains income . . . If the state’s capital gains income tax were a tax on a transaction or on the exercise of a privilege, it would apply to every sale of a capital asset. Instead, it is based on the aggregate net capital gains income from all transactions, with an income exclusion to ensure that the tax only applies to high earners. Reportable net capital gains income is pulled directly from taxpayers’ federal income tax returns. Clearly, the tax is on income, not transactions . . . In the not-too-distant future, an income tax is coming for them, and it will wipe out the one major tax advantage Washington has over its competitors.”
- Wall Street Journal: “The majority’s logic contradicts common sense, nearly a century of state law, and the view of the U.S. Internal Revenue Service, which defines capital gains as a form of income. The majority opinion boasts that ‘forty-one other states and the District of Columbia tax capital gains.’ Yes, and every one considers capital gains to be income . . . Washington State now has a capital-gains tax imposed by judges, and watch Democrats seek to build on the judicial ruling by trying to redefine other income taxes as excise taxes. The new tax bills start arriving in April. Enjoy.”
Here is the video update I provided for Washington Policy Center members yesterday on the court ruling (starts at 14:07 mark).
I’ll update this post as more editorials are published on the court’s capital gains tax decision.
Jason Mercier is the director of the Center for Government Reform at the Washington Policy Center.
Also read:
- Opinion: Let’s eliminate light rail and tolling from the I-5 Bridge replacement at the same timeEditor Ken Vance shares changes to elements of the proposed project that he believes many Southwest Washington residents would support.
- Opinion: State salary report shows running a school district is often the best job in townLiv Finne of the Washington Policy Center believes that it’s important for the public to be informed about how much school leaders are paid and how effective the system is at educating children. Washington State Fiscal Information
- Letter: ‘The process for restoring an effective representative form of government is now about the healthy functioning of citizens’ minds on important matters’Matt Garland states that Congresswoman Marie Gluesenkamp Perez is misusing federal funds by using taxpayer dollars to pay for her campaign mailers and that her town halls are really not public outreach town halls.
- Should Washington workers fired for refusing to receive a COVID-19 vaccine be rehired by the state?Should Washington workers fired for refusing to receive a COVID-19 vaccine be rehired by the state?
- Opinion: Godspeed to rehiring – Get on board, governorElizabeth Hovde believes an outreach effort by the state should contain a mea culpa that’s as loud and clear as was the shaming of public employees who chose not to receive a COVID-19 vaccine.
Gotta love all the gnashing of teeth from rich people and the people that simp for them, crying about how unfair this is, how it’s an income tax and not an excise tax, how the court had to come up with some twisted logic to render a decision that it’s constitutional.
Apparently this simple logic is difficult for some in WA to understand.
So a number of these quotes come from people that are most likely a whole lot smarter than you on the subject. You would be wise to listen to the argument. If you have been following this, nearly every expert in the subject agree that this is not right. Only the liberals in control of Washington agree with it.
“The majority’s logic contradicts common sense, nearly a century of state law, and the view of the U.S. Internal Revenue Service, which defines capital gains as a form of income”
So in your mind, is the agency that literally defines this stuff, the IRS, wrong?