The Citizen Action Defense Fund filed its lawsuit against ESSB 6346 today, with former Washington State Attorney General Rob McKenna and former Washington State Supreme Court Justice Phil Talmadge leading the challenge. The press conference is scheduled for this afternoon.
The core legal argument isn't complicated. It's been the law in Washington since 1933. But understanding why this case has a real chance — and why it might not succeed — requires understanding what happened the last time Washington tried to tax income.
1933: The Last Time Washington Had This Fight
In 1932, Washington voters approved Initiative 69 — a graduated income tax with rates ranging from 1% to 4%. The legislature, facing Depression-era budget pressure, had already passed a similar measure the year before. The income tax had broad public support. It was enacted through direct democracy.
The Washington Supreme Court struck it down in Culliton v. Chase (1933).
The court's reasoning was straightforward: Article VII of the Washington State Constitution requires that all taxes on property be uniform and capped at 1% of assessed value. The court held that income is property. A graduated tax on income — with different rates at different income levels — is not uniform. Therefore, it violates Article VII. The court didn't split on this. It was 5-4, but the majority opinion was clear: no graduated income tax unless the Constitution is amended.
That ruling has never been overturned. It has been reaffirmed repeatedly. In Jensen v. Henneford (1935), in Power Inc. v. Huntley (1951), and most recently in Quinn v. State (2002), Washington courts have consistently held that income is property and must be taxed uniformly if taxed at all.
What the New Lawsuit Actually Argues
McKenna's challenge tracks the Culliton framework directly. ESSB 6346 imposes a 9.9% tax on household income above $1 million. It is graduated — the rate changes depending on income level. It is not uniform. It exceeds the 1% constitutional cap on property taxes. Under Article VII and nine decades of precedent, that combination is fatal.
CADF Executive Director Jackson Maynard summarized it plainly at today's press conference: "If you're going to do a tax on property, you have to apply it uniformly to everybody, and it's capped at 1%. This is not that."
Talmadge's involvement is notable because he is a Democrat and a former justice. He has publicly argued for years that a progressive income tax is unconstitutional under Washington law — not as a policy preference, but as a legal conclusion. His presence signals that this isn't purely a partisan challenge.
The Legislature's Counterargument
Democrats have two responses to the constitutional challenge. The first is that income is not property — that the 1930s-era cases were wrong and the court should revisit them. The second is more subtle: that the new tax is structured differently enough that the old precedent doesn't apply cleanly.
Neither argument is frivolous. Several states have income taxes that have survived constitutional challenges, often because their constitutions have different language or courts have interpreted "property" more narrowly. The argument that income is not property has academic support. And the Washington Supreme Court's current composition is more liberal than the court that decided Culliton.
Governor Ferguson — who knows McKenna from their years on opposite sides as state AGs — said at the signing ceremony that he expects to prevail. "We never lost a case when Rob litigated the other side," Ferguson said. It was a confident line. Whether it holds up is another question.
Why the Case Is Harder Than It Looks for the State
The state's problem is not that its arguments are bad. It's that the bar for overturning settled precedent is very high, and Culliton is not marginal precedent. It has been cited repeatedly, built upon, and applied for 90 years. For the Supreme Court to uphold ESSB 6346, it would need to either (1) distinguish the new tax from Culliton's holding on some structural ground, (2) hold that income is not property — reversing nine decades of Washington law — or (3) overrule Culliton directly.
Option 3 is the most honest path, but it carries institutional costs. Courts are reluctant to overturn long-standing precedent, particularly on constitutional questions. Option 1 is possible — the legislature was careful about how it drafted the bill — but the graduated rate structure makes it difficult to argue the tax is "uniform" in any traditional sense. Option 2 requires the court to say the cases from 1933 onward were simply wrong.
None of these are impossible. But each requires the court to do something courts generally resist doing.
Two Fights, Not One
The constitutional challenge is one track. The second track is the referendum dispute, which the Washington Supreme Court will hear on April 30. That case asks whether the Legislature validly invoked the "necessity clause" to exempt ESSB 6346 from referendum — effectively blocking voters from repealing the law this fall.
If the court rules against the state on the referendum question, signature gathering could start immediately, with a June 10 deadline to get a repeal measure on the November ballot. That creates a political track running parallel to the legal one.
If the court upholds the necessity clause, the political path narrows. The fight shifts to the constitutional challenge and a potential initiative — either this year or next.
What This Means for Planning
The lawsuit doesn't change the planning calculus yet. ESSB 6346 is the law. The 2028 effective date stands. No injunction has been issued. Until a court orders otherwise, planning should proceed on the assumption that the tax takes effect as written.
What the lawsuit does change is the time horizon. A final ruling from the Washington Supreme Court could come within 18 to 24 months, possibly faster given the high-profile nature of the case. If the court strikes the law down, planning done in the interim will have been conservative but not wasted. If the court upholds the law, having a plan already in place will matter.
The practical advice is simple: plan as if the tax survives, watch the litigation closely, and preserve optionality where you can.
I'll continue covering this case as it develops. The April 30 Supreme Court hearing on the referendum question is the next major milestone.
Questions about your exposure under ESSB 6346? Schedule a 20-minute call. Or pick up a copy of the Washington State Tax Planning Guide.
