Douglas County Superior Court Hears Arguments in Lawsuit on Washington’s New Capitol Gains Tax

The state of Washington says the people bringing the consolidated lawsuit over Washington State’s recently passed capital gains tax have no case.

Douglas County Superior Court Judge Brian Hubert heard arguments Wednesday from both sides.

Noah Purcell, who is representing the state, said the plaintiff's have no case because they currently cannot demonstrate they've been harmed by the tax.

"Now, the plaintiffs also claim that the tax is creating uncertainty and causing them to face difficult decisions, like whether to move out of state, or to sell assets this year" said Purcell. "That argument confirms just how speculative their claim is. The plaintiffs cannot know currently what capitol gains are lost that they will have in any future year. The claim has to be ripe, meaning that it has to be able to show they were already harmed by the law. The plaintiffs have not."

Meanwhile, opposing Attorney Rob McKenna said that the challenge is about constitutionality, and therefore can be resolved now.

"This case was brought as a constitutional challenge to the facial validity of the new capitol gains tax," McKenna said. "Facial constitutional challenges to a new law are appropriate, including this new tax."

The tax is scheduled to go into effect Jan. 1, and would take 7 percent of annual long-term capital gains on the sales of stocks and bonds that exceed a $250,000 annual threshold.