Author: Reuven S. Avi-Yonah

Publisher:

Published: 2023

Total Pages: 0

ISBN-13:

Amici are individual law professors who have extensive knowledge in the development of the law of federal and state taxation. These amici offer their expertise in support of the State's position in this case, that Engrossed Substitute Senate Bill 5096's (“ESSB 5096's”) tax on capital gains is an excise tax and not a property tax under Wash. Const., Art. VII, § 1. The State's position is grounded not only in this Court's precedent, but in history and logic.While Amici agree with appellant Intervenors that a tax on income is not a property tax, this Court need not overrule Culliton v. Chase, 174 Wash. 363, 25 P.2d 81 (1933), to uphold the capital gains excise tax here. ESSB 5096 falls squarely within this Court's longstanding definition of an excise tax because the incidence of the tax operates upon the act of transferring capital assets and not directly upon the property itself. If this Court were to affirm the trial court's flawed logic that a capital gains tax is “properly characterized as a tax on property” under Art. VII, § 1 because it is a “tax on the receipt of income” (CP 872), the Court would be required to extend Culliton far beyond its holding and to disregard the Court's extensive excise tax precedents. These precedents are consistent with U.S. Supreme Court jurisprudence addressing similar distinctions between direct taxes on property and excise taxes on acts or transactions.The Washington Constitution does not limit the Legislature's prerogative to devise fair and equitable excise taxes to fund its residents' basic needs in housing, health care and education and to redress past economic and social inequities. The trial court erred in holding that the capital gains excise tax was a prohibited, non-uniform tax on property.