U.S. Supreme Court rejects Quinn legal challenge to Washington’s capital gains tax on the wealthy, dashing right wing hopes

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.

Best regards,

Bri­an Minnich
Exec­u­tive Vice President
Free­dom Foundation

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.

Best regards,

Bri­an Minnich
Exec­u­tive Vice President
Free­dom Foundation

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.

The North­west Pro­gres­sive Insti­tute’s pub­lic opin­ion research has found steady and con­sis­tent sup­port for this law going back near­ly a decade.

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.