Why Washington’s New Millionaire Tax Faces a Serious Constitutional Problem

Will Washington’s “Millionaire Tax” Survive a Court Challenge?

SB 6346 imposes a 9.9% tax on Washington residents’ taxable income above $1 million. The constitutional question is whether Washington courts will treat that tax as an income tax on property — which, under longstanding precedent, creates a serious uniformity problem.

The legal problem is also simple: Washington courts have treated an income tax as a property tax for nearly a century. And Washington’s Constitution makes property taxes hard to do in a progressive way.

The constitutional speed bump: “Income = property”

In Washington, the key precedent is Culliton v. Chase (1933). The Washington Supreme Court held that income is “property” under Article VII of the Washington Constitution.

That classification matters because property taxes must be uniform within the same class of property. A tax that applies only above a threshold (or uses brackets) is the opposite of uniform.

SB 6346 is explicitly non-uniform: 0% up to $1 million; 9.9% above $1 million. That looks like the exact kind of structure Washington courts have struck down when the tax is characterized as a tax on income/property.

The uniformity problem (and why this will be litigated immediately)

Washington’s Constitution requires taxes to be uniform on the same class of property. If income is property, then a “tax only on high earners” becomes legally vulnerable because it taxes the same kind of property (income dollars) differently depending on who owns it and how much they have.

This is why opponents keep calling these proposals unconstitutional “income taxes,” even if the bill is drafted with careful terminology.

“But didn’t the Supreme Court uphold the capital gains tax?”

Yes — in Quinn v. State (2023) the Washington Supreme Court upheld the state capital gains tax.

But that decision does not green-light a general income tax. The Court upheld the capital gains tax by characterizing it as an excise tax on the transaction (the sale/exchange of assets), not a tax on income itself.

SB 6346 is different: it taxes aggregate annual income above $1 million, not a specific transaction. That difference is likely to be the heart of the court challenge.

Seattle already tried a “high earner” income tax — and lost

Seattle’s attempt at a high-earner income tax was invalidated in Kunath v. City of Seattle (Wash. Ct. App. 2019), largely on the same “income-as-property / uniformity” framework. The state Supreme Court let that decision stand.

SB 6346 — any challenge to it is likely to proceed along that same income-as-property / uniformity theory.

What the state will say

The state will almost certainly argue that modern tax doctrine — and the reasoning in Quinn v. State — supports a narrower reading of older income-tax cases. It will contend that SB 6346 taxes a legislatively defined income base as a taxable incident, not property as such, and that Washington courts should not mechanically extend 1930s precedent to a carefully structured modern statute. The challengers, however, will argue that SB 6346 is different from the capital gains tax in a crucial respect: it taxes annual income directly, not a specific transaction or privilege. That distinction is likely to be the heart of the constitutional fight.

What this means practically

For founders, investors, and high-income households, the immediate takeaway is uncertainty. If enacted, SB 6346 would almost certainly face prompt constitutional litigation, and courts could enjoin the tax while that litigation proceeds. Taxpayers should not assume the law will either take effect cleanly on January 1, 2028, or be cleanly invalidated. The planning questions around residency, timing, entity structure, and estimated payments will matter regardless of how the constitutional question resolves — and the answers will differ depending on the outcome.

Bottom line

If SB 6346 becomes law, the core question won’t be politics — it will be constitutional taxonomy:

• Is this a tax on income (and therefore “property”)?
• Or can the state plausibly frame it as an excise tied to a specific taxable incident?

Under existing Washington precedent, SB 6346 appears vulnerable because it looks much more like a direct tax on income than an excise on a specific transaction, and Washington courts have historically treated nonuniform income taxes as constitutionally suspect

For a comprehensive planning guide, see the Washington State Tax Planning Guide for High Earners ($49.99)..