Quinn oral arguments
The Washington State Supreme Court hears oral argument in Quinn et al v. Washington State et al (Photo: Andrew Villeneuve/NPI)

Today, the Wash­ing­ton State Supreme Court heard oral argu­ments in Quinn et al v. State of Wash­ing­ton et al, the right wing legal chal­lenge to the con­sti­tu­tion­al­i­ty of our recent­ly enact­ed cap­i­tal gains tax on the wealthy, which was passed into law in 2021 and is now being imple­ment­ed by the Depart­ment of Revenue.

A group of peo­ple and enti­ties known as the Quinn plain­tiffs have hired for­mer Attor­ney Gen­er­al Rob McKen­na, for­mer Assis­tant Attor­ney Gen­er­al Cal­lie Castil­lo, and addi­tion­al coun­sel sym­pa­thet­ic to the Repub­li­can aim of keep­ing tax­es for the super­wealthy as low as pos­si­ble to try to get the law (ESSB 5096) thrown out.

Sup­port­ing this effort are bil­lion­aire fund­ed anti-tax enti­ties like the Wash­ing­ton Pol­i­cy Cen­ter (which real­ly ought to be known as the Wash­ing­ton Right Wing Pol­i­cy Cen­ter, giv­en its strong and fixed ide­o­log­i­cal orientation.)

WRWPC is so des­per­ate to win this case that they’ve resort­ed to try­ing to lob­by the nine Supreme Court jus­tices with unreg­u­lat­ed, geofenced adver­tis­ing, as The Seat­tle Times’ David Gut­man report­ed today in a must-read piece.

Stand­ing in defense of the cap­i­tal gains tax is the State of Wash­ing­ton, rep­re­sent­ed by Attor­ney Gen­er­al Bob Fer­gu­son’s office, and the pro­gres­sive move­ment. Because ESSB 5096 is a law enact­ed by the Leg­is­la­ture, its defense is pri­mar­i­ly the respon­si­bil­i­ty of the Attor­ney Gen­er­al, the state’s chief legal officer.

Solic­i­tor Gen­er­al Noah Pur­cell pre­sent­ed the state’s argu­ments this morn­ing to the Court, squar­ing off against McKen­na and Castil­lo. Pur­cell co-pre­sent­ed with an attor­ney for the inter­venors in the case, Paul Lawrence of Paci­fi­ca Law Group. Paul is one of NPI’s inau­gur­al Lynn Allen Award hon­orees; he has brought many suc­cess­ful cas­es before the Court and secured a series of three deci­sions that result­ed in the inval­i­da­tion of all of Tim Eyman’s most recent initiatives.

I trav­eled on NPI’s behalf to Tumwa­ter to observe the oral argu­ments first­hand, and doc­u­ment the his­toric hear­ing in pho­tographs. Here are my impres­sions of the hour­long dis­cus­sion of the case between the jus­tices and counsel.

This is a case with pro­found impli­ca­tions for the state’s future

The jus­tices seem well aware that how they rule will affect the tra­jec­to­ry of the effort to make Wash­ing­ton’s upside down tax code more just and equitable.

If they rule for the Quinn plain­tiffs, the cap­i­tal gains tax on the wealthy would be thrown out, and the Leg­is­la­ture would have to reen­act it to ensure the Edu­ca­tion Lega­cy Trust is not deprived of an impor­tant source of revenue.

If they rule for the state and inter­venors, the Leg­is­la­ture’s work to improve the tax code will have sur­vived con­sti­tu­tion­al scruti­ny, and a low­er court rul­ing sid­ing with the Quinn plain­tiffs will dis­ap­pear into the dust­bin of history.

What got discussed

The major argu­ments of both sides were exten­sive­ly scru­ti­nized by the jus­tices, who probed for weak­ness­es with their ques­tions. Here’s a quick summary:

  • Solic­i­tor Gen­er­al Noah Pur­cell con­tend­ed that the cap­i­tal gains tax on the wealthy pass­es con­sti­tu­tion­al muster because the Leg­is­la­ture designed it to be an excise tax, not unlike the inher­i­tance (estate) tax that has already been ruled con­sti­tu­tion­al, or the real estate excise tax.
  • Coun­sel for the respon­dents Rob McKen­na and Cal­lie Castil­lo argued the cap­i­tal gains tax is an uncon­sti­tu­tion­al income tax and also vio­lates the Com­merce Clause of the U.S. Con­sti­tu­tion. They claim the tax is real­ly a tax on income, despite what the state says, so it is there­fore a tax on prop­er­ty, because the Court has pre­vi­ous­ly held that income is property.
  • Paul Lawrence, speak­ing for the inter­venors, urged the jus­tices to recon­sid­er some of the Court’s pre­vi­ous hold­ings (like Cul­li­ton, a poor­ly rea­soned deci­sion that we’ve been stuck with since the 1930s) if they decide the state is wrong about the cap­i­tal gains tax being an excise tax.

We’ve been post­ing briefs to capitalgainstax.legal if you’re inter­est­ed in delv­ing deep into the case. Judges often remark that 90% or greater of a case comes down to the briefs, even though oral argu­ment usu­al­ly draws more atten­tion than the fil­ing of a brief by one or more parties.

The court and the court of pub­lic opin­ion: McKen­na brings up the elec­toral his­to­ry of the decades-long effort to over­turn Cul­li­ton

Wash­ing­ton State’s cap­i­tal gains tax on the wealthy was cre­at­ed as an excise tax. As men­tioned above, McKen­na, Castil­lo and their clients insist that it’s real­ly an “ille­gal, uncon­sti­tu­tion­al income tax,” and they have been repeat­ing this to any­one who will lis­ten to them. We have test­ed this argu­ment in our polling against argu­ments for the tax and found that it does­n’t res­onate with vot­ers.

Nev­er­the­less, oppo­nents of just and equi­table tax­a­tion have per­sist­ed in char­ac­ter­iz­ing the cap­i­tal gains tax as an income tax, rea­son­ing that invok­ing what they think is the spooky third rail of Wash­ing­ton pol­i­tics will ulti­mate­ly help them pre­vail in their efforts to keep the state’s tax code upside down.

To that end, McKen­na remind­ed the jus­tices that on six occa­sions, vot­ers have said no to attempts to change the Con­sti­tu­tion to respond to the Cul­li­ton deci­sion from the 1930s. McKen­na was mak­ing the point that the Leg­is­la­ture actu­al­ly mus­tered super­ma­jori­ties to law­ful­ly over­turn Cul­li­ton, only to be repulsed.

But just because those par­tic­u­lar amend­ments failed does­n’t mean vot­ers con­cur with the Cul­li­ton deci­sion or are fine with the con­se­quences of it.

And those con­se­quences have been profound.

Wash­ing­ton State has been ranked by ITEP repeat­ed­ly as hav­ing the worst state tax code in the coun­try. Those who have the most pay the least, and those who have the least pay the most. (Hence the “upside down” moniker.)

The Cul­li­ton deci­sion is a big rea­son for this inequity all these decades later.

Were it not for Cul­li­ton, Wash­ing­ton might have kept the grad­u­at­ed income tax vot­ers said yes to all the way back in 1932. Instead, for almost a cen­tu­ry, we’ve had a tax code based on a sales tax and a gross receipts busi­ness tax.

For­tu­nate­ly, the Cul­li­ton deci­sion is not the Con­sti­tu­tion — it is an inter­pre­ta­tion of the Con­sti­tu­tion, and today’s Supreme Court could hold that it was wrong­ly decid­ed. But even if it did­n’t, as McKen­na admit­ted, it would­n’t be uncon­sti­tu­tion­al for Wash­ing­ton to levy an income tax. Under Cul­li­ton, the tax would just have to be uni­form. It was nice that McKen­na said this, because I’ve lost track of the num­ber of times peo­ple have claimed that an income tax is uncon­sti­tu­tion­al. Such state­ments are in error, and it’s nice to have tape of McKen­na say­ing so.

With ESSB 5096, the Leg­is­la­ture attempt­ed to make Wash­ing­ton’s tax code more equi­table with­out run­ning afoul of the Supreme Court’s pri­or hold­ings. If the Court decides the Leg­is­la­ture suc­ceed­ed, it does­n’t need to reach the ques­tion of whether Cul­li­ton was wrong­ly decid­ed. If it decides the Leg­is­la­ture failed, it could revis­it Cul­li­ton. It would be a rather remark­able result if Cul­li­ton fell as a result of this right wing legal chal­lenge to Wash­ing­ton State’s new cap­i­tal gains tax law.

Regard­less of what hap­pens, our research sug­gests we have entered a polit­i­cal era in Wash­ing­ton State in which pop­u­lar sup­port for pro­gres­sive tax­a­tion is able to with­stand the right wing’s howls of Run for your lives, that’s an income tax! If ESSB 5096 does­n’t sur­vive, we’ll just work to reen­act the cap­i­tal gains tax on the wealthy, because Wash­ing­ton needs it and the pub­lic sup­ports it.

Who asked ques­tions of coun­sel, and who didn’t 

Asso­ciate Jus­tices Sheryl Gor­don McCloud, Raquel Mon­toya-Lewis, Charles John­son, Debra Stephens, Bar­bara Mad­sen, and Chief Jus­tice Steven Gon­za­lez asked ques­tions of coun­sel. I did not hear Jus­tices Mary Yu, Susan Owens, or G. Helen Whiten­er ask any ques­tions. Mon­toya-Lewis and Gor­don McCloud asked the most ques­tions of the six jus­tices who spoke up.

Gor­don McCloud was first out of the gate — her exchange with Solic­i­tor Gen­er­al Noah Pur­cell con­sumed sev­er­al min­utes dur­ing the first part of oral argument.

Curi­ous­ly, Gor­don McCloud made not one but mul­ti­ple mis­state­ments dur­ing the course of the hour, prompt­ing Pur­cell and lat­er McKen­na to gen­tly cor­rect her. She also for­got to turn on her micro­phone the first time she asked a ques­tion, prompt­ing the Chief Jus­tice to remind all of his col­leagues to acti­vate their mics.

What it was like to be in the room

The Supreme Court isn’t cur­rent­ly meet­ing in its ornate space in the Tem­ple of Jus­tice; that build­ing is being ren­o­vat­ed. So the jus­tices, coun­sel, media, and inter­est­ed observers instead filled a small­er space at an office build­ing in Tumwa­ter off of Israel Road. The jus­tices sat at a long table with name plac­ards on it, fac­ing the tables for the coun­sel and a makeshift cen­ter podium.

Atten­dees sat behind coun­sel and to the sides.

The tem­po­rary meet­ing space has chairs for only around thir­ty-five guests, but it seemed that every­one who want­ed to wit­ness this oral argu­ment in-per­son was able to, which meant the Court did­n’t have to turn a bunch of peo­ple away.

Quinn could end up being a land­mark case, and I think those who showed up today appre­ci­at­ed how impor­tant the stakes of it are for Wash­ing­ton’s future.

There were no out­bursts or inter­rup­tions of any sort dur­ing the argu­ments; peo­ple lis­tened qui­et­ly and respect­ful­ly. The only prob­lem I heard com­ment­ed on lat­er was a lack of con­nec­tiv­i­ty: the Court’s Wi-Fi did­n’t work prop­er­ly and cel­lu­lar devices’ sig­nal strength was too weak for live­blog­ging or even livetweeting.

When might the Court rule? We don’t know

It is unknown when the Court will return a deci­sion. The Court does­n’t usu­al­ly offer ETAs for opin­ions. Pur­cell asked the Court if it might be pos­si­ble to get a rul­ing before the Leg­is­la­ture adjourns Sine Die in April, but the Court is under no oblig­a­tion to acqui­esce. The jus­tices observed in reply to his com­ments that they have already giv­en approval for the Depart­ment of Rev­enue to move for­ward with imple­ment­ing ESSB 5096 while the case moves towards a final resolution.

About the author

Andrew Villeneuve is the founder and executive director of the Northwest Progressive Institute, as well as the founder of NPI's sibling, the Northwest Progressive Foundation. He has worked to advance progressive causes for over two decades as a strategist, speaker, author, and organizer. Andrew is also a cybersecurity expert, a veteran facilitator, a delegate to the Washington State Democratic Central Committee, and a member of the Climate Reality Leadership Corps.

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