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BIAW, Cattlemen’s association lend support to capital gains income tax case

January 3, 2022

The Building Industry Association of Washington (BIAW) and the Washington Cattlemen’s Association (WCA) have joined in supporting the legal challenge to Washington’s new capital gains income tax.

The groups filed an amicus—or friend of the court—brief in the case in late December. Another group, representing tax economists and policy analysts, including the Washington Policy Center, filed its amicus brief earlier that same week.

“The hardworking business owners who make up our associations’ membership deserve to have their income taxed fairly, consistently and constitutionally,” said BIAW General Counsel Jackson Maynard. “We are proud to stand with other associations and point out all the terrible ways that this illegal and unconstitutional tax is also bad for businesses in our state.”

Capital gains income tax went into effect Jan. 1, 2022

The new tax went into effect Jan. 1. It levies a 7% tax on capital gains above $250,000 from the sale of assets such as stocks and bonds. As a compromise, the legislature exempted the sale of real estate, livestock and small family-owned businesses. If the courts fail to overturn it, first payments will be due in 2023.

The amicus brief argues, among other things, the state treats capital gains differently than every other state and the federal government. This radical departure creates an undesirable inconsistency which will drive businesses our of our state. This could negatively affect tax revenue in the end.

“If Washington lawmakers are willing to ignore the constitution now to achieve their legislative agenda, will they do so again?” Maynard said. “No rational business owner wants to operate in an environment of legal uncertainty, under a tyrannical legislature that ignores constitutional limits on its power.

Briefs support case filed by former AG

Two groups filed suits challenging the new capital gains income tax in spring of 2021. The first group was represented by the Freedom Foundation. The second was a group of farmers, business owners, investors, and the Washington Farm Bureau, represented by former Washington Attorney General Rob McKenna.

Douglas County Superior Court consolidated the two cases. Then Judge Brian Huber issued a ruling denying the state’s motion to dismiss the case in September.

We expect a ruling in the case soon, but anticipate an eventual appeal to the Washington State Supreme Court.

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