A lawsuit challenging the constitutionality of Washington State’s capital gains tax on the wealthy will not be considered by the United States Supreme Court, the justices decided today, bringing the right wing’s efforts to overturn Engrossed Substitute Senate Bill 5096 through the Quinn case to an end.
Without comment, as its custom, the Court (often referred to as SCOTUS, to delineate it from the many state Supreme Courts in the land, like Washington’s) denied the petition for certiorari filed by the Quinn plaintiffs, a group of Washingtonians organized by opponents of fair taxation who want to nix the tax and roll back the progress made on requiring the rich to pay their fair share.
Right wing media immediately portrayed the decision as an expected “setback” for efforts to overturn the tax — the same posture they took when they lost in the State Supreme Court last year. But it’s clear from the materials received and reviewed by our team NPI from the right wing forces that had backed the petition that they had strong hopes of getting the Quinn case before the high court.
For example, on January 5th, Freedom Foundation VP Brian Minnich sent out this note to the group’s followers commenting on the latest developments:
The U.S. Supreme Court has once again delayed consideration of the Freedom Foundation’s capital gains tax case. Our appeal to SCOTUS was to be considered in conference today (Jan. 5) along with several other cases before the court. While the court did not identify a specific date for reconsideration, it is likely the case will be considered on either January 12th or January 19th.
I continue to believe this is good news. As stated last month, I’m optimistic the further delay means one or more Justices have taken a strong interest and are working to obtain the vote(s) necessary from the other Justices (need four total) to grant cert of the case.
We’ll keep you posted as more details emerge.
Thank you for supporting our effort to overturn Washington’s unconstitutional tax scheme.
Executive Vice President
Highlighting is mine.
Here’s what Minnich had to say after cert was denied:
Today, the U.S. Supreme Court denied cert in the Freedom Foundation’s case to overturn Washington state’s capital gains income tax.
To say the least, the court’s decision to not hear the case and overturn an illegal act by the Legislature, Governor and State Supreme Court is disappointing.
Regardless of the odds and even the outcome, these battles must be fought. Thank you for standing with us.
On a positive note, this is not the last word regarding capital gains. WA voters this fall will get the final say on the capital gains income tax issue. Initiative 2109, which repeals the tax, will be on the November ballot.
Again, thank you for your support.
Executive Vice President
The right wing Washington Policy Center joined Minnich’s group in going all in on the Quinn appeal to the United States Supreme Court, submitting an amicus brief and warning that if the Court didn’t take the case, there would be grave consequences. From a January 2nd blog published by WPC:
The stakes are huge for Washington State and the nation. If the court does not take this petition or upholds the lower court rulings, it opens a pandora’s box of states taxing activity in other states and the potential unraveling of the Commerce Clause.
The Roberts / Alito court was not persuaded by these hyperbolic arguments.
It is the Legislature’s job to propose laws, it is the governor’s job to sign them, and it is the judiciary’s job to interpret them and decide to pass constitutional muster. All three branches of state government have now given Engrossed Substitute Senate Bill 5096 a thumbs up and the federal judiciary has let their work stand, yet Minnich continues to hilariously call the legislation “illegal.”
ESSB 5096 is the law of the land and is wholly constitutional. That’s the reality. Minnich is free to not like it, but the question of whether 5096 is legal and constitutional has now been resolved after a multi-year legal battle.
Supporters of fair taxation joined NPI in praising the decision.
“It’s great news for Washington state and our country that the United States Supreme Court has decided not to hear oral arguments for Quinn v. Washington,” said Budget and Policy Center Executive Director Misha Werschkul.
“This case was a cynical attempt by the wealthiest Washingtonians to overturn a modest tax impacting only the very wealthiest 0.2% of Washington taxpayers. In 2023 alone, the capital gains excise tax raised nearly $1 billion to pay for investments in schools, child care, and early learning.”
“With today’s order, the Washington State Supreme Court’s overwhelming 7–2 ruling in favor of the constitutionality of the tax stands.”
“Our capital gains tax was signed into law by Governor Inslee in 2021 and upheld by the Washington State Supreme Court last year in an overwhelming 7–2 decision. As a refresher, this Washington law enacts a modest 7% excise tax on annual capital gains above $250,000, exclusively paid by the wealthiest 0.2% of Washingtonians, whose incomes average $2.6 million annually.”
“The funding provides critical supports for early learning, child care, and schools in Washington. So far, the projections for how much revenue this tax will provide have blown original estimates out of the water.”
“The Department of Revenue anticipates a whopping $900 million will be collected in the first year alone to strengthen our communities.”
“We’re so grateful to the advocates who fought hard for this win and for those wealthy individuals who spoke out about the need for this tax and the revenue it will provide to school districts and early learning programs.”
“Polls show Washingtonians strongly support making the wealthiest pay what they truly owe in taxes for services all of us depend on,” added Treasure Mackley of Invest in Washington Now. “We know the wealthy pay what they owe, just like the rest of us, our communities are stronger. Only when we have a fair tax code can we undo decades of disinvestment in education that hurts families, communities, and small businesses and disproportionately impacts BIPOC children.”
The Center Square kindly gave NPI an opportunity to comment on the decision to deny cert today. I told them that the United States Supreme Court made the right decision by declining to take up the Quinn case.
As the State argued, there was no basis for certiorari. The plaintiffs clearly lacked Article III standing and their arguments against Washington’s capital gains tax on the wealthy were defective. This truly is the end of the road for the Quinn case and a big victory for fair taxation in Washington.
The events of the last three years have vindicated the Legislature’s work to balance Washington’s tax code by levying a capital gains tax on the wealthy.
Happily, the tax is bringing in more money for education, early leaning, and childcare than it was originally expected to, defying the naysayers, who said it wouldn’t work. Its legality and constitutionality have been affirmed by the Washington State Supreme Court in a landmark decision. And now the U.S. Supreme Court has allowed that ruling to stand.
Opponents of ESSB 5096 have just one pathway left to overturn the law: the ballot. Our team and allies in the movement for fair taxation in Washington anticipated from the beginning of this effort that someone would put up the money to eventually force a statewide vote on whether to keep or discard this landmark victory for tax fairness. And now someone has: multimillionaire hedge fund manager Brian Heywood, a top donor to state Republicans.
We welcome the opportunity to secure yet another victory upholding our capital gains tax on the wealthy, this time in the court of public opinion.
We believe if we run a strong and effective campaign against Heywood’s Initiative 2109, it will be rejected this autumn, paving the way for further progressive tax reform we sorely need in the years ahead. You can support the effort to defeat I‑2109 by making a donation to Stop Greed, or signing up for updates.