Attorney General asks court to dismiss capital gains tax lawsuits

Washington Attorney General Bob Ferguson has filed a motion in the Douglas County Superior Court to dismiss two lawsuits filed against the state’s newly enacted Capital Gains Tax Act. As suggested during a recent state Supreme Court hearing on a bank tax, Ferguson argues, among other things, that plaintiffs have no legal force for not having paid the tax.

“You have no way of knowing what capital gains you will have in the years to come,” Ferguson continued. “In short, the plaintiffs are trying to give the go-ahead.”

Incidentally, Ferguson’s pleading fails to address the plaintiffs’ central allegation that the tax violates the constitutional uniformity clause on wealth taxation. Although the letter refers to it as a consumption tax, it also states that taxpayers must return their federal income tax returns to the Treasury Department for the taxable year.

“The absurdity of this Washington capital gains tax debate continues,” wrote Jason Mercier, director of government reform for the Washington Policy Center, in an email. “First there was a refusal to call the tax what everyone else in the world would agree is an income tax. Then there was the claim that the introduction of an income tax on capital gains, despite massive revenue growth, was an emergency that justified denying the people the right to referendums. Now the Attorney General is arguing that it is merely a “political” dispute and that the tax will not be due until 2023, the court should now prevent any legal challenge. Will the government’s next argument be that you don’t own your income? “

In his letter Ferguson quotes a State Law describes how a taxpayer can claim a refund for paying a tax that did not apply to him, but only after the tax has been paid.

However, former Attorney General Rob McKenna recently told Lens that this state law, cited during the recent Supreme Court hearing and in Ferguson’s abstract, concerns recourse to taxpayers when a tax is not actually owed, not the legality of the Tax is in question.

In this provision it is stated:

All taxes, penalties and interest must be paid in full prior to bringing any legal action to challenge all or part of such tax, penalty or interest. No court or judge may issue or issue an injunction or injunction to restrict or prohibit the collection of taxes or penalties or parts thereof, unless the judgment is contrary to the United States Constitution or the state.

Ferguson’s letter also demands that the cases be transferred to the Thurston County Superior Court, arguing that “a change of jurisdiction in this case would bring about the end of justice. Legislature enacted this tax in Thurston County and the Department will administer it from Thurston County; No relevant government action is being carried out in Douglas County. “

The Thurston County Superior Court has ruled on similar cases, including the 2016 Proposition 1 in the city of Olympia, which introduced a tiered income tax. Although the measure was rejected in the November elections, the court decided to reject it on legal grounds.