On Thursday, January 26, the State Supreme Court heard oral arguments in Chris Quinn v. State of Washington, the case challenging the constitutionality of the state's new income tax on capital gains falsely labeled as an "excise tax." Washington Policy Center's President and CEO, Mike Gallagher was there alongside Jason Mercier, WPC Center for Government Reform Director as well as WPC Treasurer Nathan Rimmer and WPC Chair Kevin Bouchey.

Justices aggressively questioned what actually triggered the state tax -- whether it was the transaction, or the income.  While the state responded with assertions the transaction was the key, gains based on the transaction were also repeatedly brought up, which left some justices sounding rightfully skeptical of the claim the "transaction" was really the thing being taxed.   The Washington Education Association's argument that the Court should reassess how our state defines property and exclude income as property also led to a lively discussion about the proper way to change that assessment.

Counsel against the income tax pointed out that the Court needn't decide what kind of tax it is, because it is unconstitutional and violates the Commerce Clause of the U.S. Constitution either way. They also pointed out how the tax is not a tax transactions but on income and how the IRS and all 49 other states treat capital gains taxes as income taxes because that's what they are (a fact no doubt familiar to regular readers of WPC research). 

I was there to capture reactions and analysis which you can see below.

The full hearing was broadcast on TVW and can be viewed here....

WPC President and CEO Mike Gallagher's reaction and analysis of the proceedings: 

WPC Government Reform Direct Jason Mercier, whose research has been cited repeatedly in the case, provides his assessment of the morning's proceedings here: 

Counsel for Chris Quinn, etc., and former Attorney General Rob McKenna offered WPC his assessment: 

For more information on this tax, its implications and what it would mean for Washington, click here and be sure to sign up for our newsletter to stay informed.