OLYMPIA—The Citizen Action Defense Fund (CADF), former Attorney General Rob McKenna, and former Supreme Court Justice and State Senator Phil Talmadge officially filed a lawsuit against the state of Washington, the Department of Revenue and Acting Director John Ryser challenging the newly enacted income tax on Thursday, April 9. The suit filed in Klickitat County Superior Court, seeks a declaratory judgment invalidating the tax in its entirety arguing it unlawful and invalid because it violates Article VII, Sections 1 and 2 of the Washington Constitution.
This case is not about the current income tax alone,” Former AG Mekenna told the Lynnwood Times. “This case is about whether or not the state legislature and the governor will have the ability to pass and sign into law future income taxes that apply to everybody in Washington state.”
Mckenna added, “They’ve started by limiting this tax to a subset of taxpayers, but if they’re successful in getting the Supreme Court to throw out precedent after precedent after precedent and to ignore the plain meaning of the Constitution and to ignore the voters’ will, which has been clearly and emphatically expressed 10 times, then the door will be open for them to expand this tax to as many taxpayers as they choose…. I think we can trust our Supreme Court to uphold clear and clearly reasoned precedent to respect the language in the Constitution.”
Former Supreme Court Justice Talmadge shared with the Lynnwood Times that “uniformity” to applying a tax on income that is considered property, is the “linchpin” to their argument.
“If that principle that was established in the multiplicity of cases that Rob has referenced goes out the door, then the legislature by statute can enact whatever it chooses to enact as a graduated income tax,” Talmadge said. “It has complete and utter discretion at that point to tax whatever it chooses to tax at whatever level.”
The lawsuit was brought on behalf homebuilder Benjamin Petter and his wife Lauren Petter of Chelan County; farmer Robert Mercer and his wife Brenda Mercer, who own property straddling Klickitat and Benton counties; trucker Curt Nuccitelli and Beatrice Gasper of Kent; and four nonprofit business groups: the Ethnic Chamber of Commerce Coalition, Yakima Klickitat Farm Association, Building Industry Association of Washington and the National Federation of Independent Business.
The plaintiffs claim they have earned more than $1 million in Washington taxable income in recent years and will continue to do so, making them subject to the statewide income tax.
The lawsuit targets Senate Bill 6346, which Governor Bob Ferguson signed into law on March 30. The law imposes a 9.9% tax on “Washington taxable income” above $1 million, effective January 1, 2028. Income at or below that threshold is taxed at 0% and married couples share the $1 million threshold regardless of filing status.
The plaintiffs allege the tax is unconstitutional on two grounds:
- Article VII, Section 1 of the state constitution requires all taxes on property to be uniform within the same class of property. Article VII, Section 1 defines “property” broadly to include “everything, whether tangible or intangible, subject to ownership.”
- Article VII, Section 2 caps the aggregate tax burden on property at 1% annually.
“For nearly a century, Washington courts have been clear: income is property, and property taxes must be uniform and limited,” said Rob McKenna. “This law disregards both the plain language of the constitution and decades of consistent Supreme Court precedent. We are confident the courts will strike it down.”
According to the complaint filed, Culliton v. Chase, 174 Wash. 363 (1933), struck down a graduated income tax along with subsequent rulings including Jensen v. Henneford (1936), Power Inc. v. Huntley (1951) and Kunath v. City of Seattle (2019). The complaint also states that a graduated rate violates the uniformity requirement and that the 9.9% rate exceeds the 1% cap.
Washington voters have rejected statewide income tax measures 10 times since 1934 — six proposed constitutional amendments and four ballot initiatives — most recently Initiative 1098 in 2010 by a 64%-36% margin.
“The legislature, choose not to do what all the other legislatures have done, which have wanted a graduated income tax, which was to send a constitutional amendment to the ballot to allow voters to decide,” Mckenna told attendees at Thursday’s presser. “This legislature is doing everything it can to avoid giving the voters a say. They don’t want this issue to be in front of the voters.”
The lawsuit also has issue with the law’s “necessity clause” declaring it necessary for the support of state government, which prevents a public referendum under Article II, Section 1(b) of the constitution pointing out the fact that the tax does not take effect until 2028 and revenue will not be collected until 2029.
CADF has retained former Washington Attorney General McKenna of Orrick, Herrington, & Sutcliffe LLP to lead the legal challenge, alongside former Washington Supreme Court Justice and Senate Judiciary Chair Talmadge of Talmadge/Fitzpatrick. Both attorneys lend bipartisan support and their considerable credentials to this fight.
“The minority-owned small businesses we represent—are already navigating rising costs and economic uncertainty,” said Mike Sotelo, Co-Chair of the Ethnic Chamber of Commerce Coalition, a plaintiff in the lawsuit. “This tax adds another layer of instability that makes it harder for entrepreneurs to grow, hire, and stay in Washington. We’re proud to stand with our members in challenging a law that threatens their future.”
The lawsuit also warns that the tax threatens Washington’s longstanding competitive advantage as a state without a personal income tax, and is already driving businesses, investment, and entrepreneurs out of the state.
Ferguson signs income tax into law
Governor Bob Ferguson signed Senate Bill 6346 into law March 30, enacting a 9.9% income tax on annual income above $1 million as the Citizen Action Defense Fund announced it will be filing a legal challenge and Let’s Go Washington also announcing it is launching a referendum to repeal the measure.
The bill passed the full Senate on a 27-22 party-line vote Feb. 16 and the House on a 51-46 vote March 10 after a near 25-hour Republican-led marathon debate. The new statewide income tax applies to both residents and nonresidents with Washington-sourced income, hits pass-through entities such as LLCs and S-corps while exempting C-corps, and carried a $1 million standard deduction.
Ferguson described the measure as a historic step to address the state’s regressive tax system.
“It’s been a long journey to get here, but because of the hard work of so many folks, it’s a historic day for Washingtonians,” Ferguson said at the bill signing adding, “I’m proud to join all of you in making history today.”
The legislation aims to expand the Working Families Tax Credit to 460,000 additional families, fund free breakfast and lunch for every K-12 student, invest more than $300 million in affordable child care, reduce or eliminate the business-and-occupation tax for 138,000 small businesses, and remove the sales tax on baby diapers, over-the-counter drugs and hygiene products.
However, none of this is specifically earmarked in the legislation as all of the revenues less 5% for attorneys are deposited into the General Fund.
Ferguson thanked a broad coalition of supporters including the income tax bill’s prime sponsor Sen. Jamie Pedersen (D–Seattle), House Majority Leader Rep. Joe Fitzgibbon (D–West Seattle) who sponsored a companion bill, and Rep. April Berg (D–Mill Creek) who proposed an amendment to provide free breakfasts and lunches to all students enrolled in Washington public schools.
Lawmakers condemn new income tax
Senate Republican Leader John Braun (R-Centralia) called the income tax bill signing “a dark day in our state’s history.”
“An income tax on anyone in our state will become an income tax on everyone,” Braun wrote in his statement calling on the governor to veto the section of the bill preventing a voter referendum. “We fought this long and hard during the session because we know this tax won’t make living in Washington more affordable, for all the reasons listed in our veto request – including how it will drive job creators and their resources from our state.”
During an historic near 25-hour marathon House floor debate, Republicans introduced approximately 80 amendments intended to address what they considered concerns about the fairness and constitutionality of SB-6346. Nearly all were rejected by the Democratic majority and among the amendments rejected were:
- A referendum to let voters decide whether Washington should have an income tax.
- Removing the bill’s “emergency clause” so the bill takes effect immediately however it is begin collecting taxes in 2028.
- Fixing the bill’s marriage penalty so married couples wouldn’t be treated worse than single filers.
- Protecting small businesses with pass-through income from being swept into the tax.
- Requiring a vote before the tax could ever expand beyond “millionaires.” to high earners making over $150,000 as proposed in the payroll tax in the 2026 session.
- Protecting retirees by exempting pension income.
- Exempting the income of active-duty military service members.
House Appropriations Committee Ranking Minority Member Rep. Travis Couture (R-Allyn) in an interview with the Lynnwood argued that the state faces spending issues rather than revenue shortfalls and warned of capital flight already that is already under way.
Couture shared that the only thing binding in the proposed income tax bill is 5% ($175 million) earmarked for attorneys which would be used to hire upwards of 223 Full-time personnel at the Washington State Department of Revenue. He alleged this is equivalent to when the federal government hired 80,000 IRS agents to go after Americans, implying that the Ferguson administration is laying the groundwork to weaponize the income tax against Washingtonians.
He pointed out that the timing of a 2028 effective date coincides not only with Ferguson’s re-election but also when state union employee collective bargaining agreements are up that same year—a $3 billion compensation on top of an estimated COLA maintenance level of $3 billion to $5 billion over 2029 and 2030. Those obligations, Couture added, came on top of other deferred programs such as the Fair Start for Kids initiative, estimated at $1 billion, and various tax credits and spending pledges written into the tax legislation only as statements of intent.
“And so, we will continue to see multibillion-dollar deficits well into the future,” Couture told the Lynnwood Times.
Couture added that his number one concern, other than it being unconstitutional and capital flight, was that the tax would not remain on millionaires. “It will be a tax on the middle class and the lower middle class in no time,” Couture said.
He further warned that the income tax could expand beyond millionaires to affect more residents, something Sen. Pedersen admitted to during committee when pressed by a Republican colleague.
“My number one concern, other than it being unconstitutional and all the capital flight, is that it won’t remain on millionaires,” Couture said. “It will be a tax on the middle class and the lower middle class, in no time. And that’s what I see when I look at the budget, when I see through the numbers into what’s going on. It’s not sustainable to be [limited to] a millionaire’s tax.”
Critics warn of capital flight
The income tax followed earlier revenue measures, including a capital gains tax enacted in 2021 and estate tax adjustments signed March 24, amid repeated budget shortfalls that reached $2.3 billion in the current biennium.
The bill takes effect immediately upon signing, with collections scheduled to begin in 2029 and generate an estimated $3.5 billion annually from approximately 21,000 filers (or less than 0.3% of residents). Howard Schultz, Starbucks Founder and twice CEO, announced his family’s relocation to Florida after 44 years in Seattle on March 10, the same day the House passed the bill.
Starbucks recently announced plans to open a Nashville corporate office later in 2026 to bolster supply chain operations, relocating some Seattle-based roles, aligning with broader corporate shifts to lower-tax states like Tennessee, which has no state income tax.
Schultz, whose net worth is estimated at approximately $3.5 billion, now joins former Washingtonians Jeff Bezos (net worth ~$200 billion) who moved to Miami in November 2023, and Ken Fisher (net worth ~$13 billion) who moved to Dallas that same year.
Tax Foundation senior fellow, Jared Walczak, said that the Washington state income tax would create the nation’s highest combined rate for Seattle residents resulting in result in a combined state and local top marginal rate of roughly 18% on wage income and restricted stock.
Walczak wrote that the new income tax signed by Gov. Ferguson for income above $1 million, would stack on top of existing state and local payroll taxes. These include the 0.58% Washington Cares tax, Seattle’s JumpStart Payroll Expense Tax of up to 2.557%, and a 5% Social Housing Tax on income above $1 million. He clarified that although the payroll taxes are remitted by employers this will ultimately be borne by employees through lower wages or slower wage growth. When added to the federal income and Medicaid taxes, the all-in top marginal rate would reach 57.937%.
He added that the income tax would fall largely on small business owners and on tech workers receiving restricted stock units in compensation and particularly detrimental to employees at startups that have yet to go public and whose RSUs could all vest at once.
In a separate analysis, Walczak described a growing divergence in state income tax policy.
Two decades ago, 21 states had top rates between 5% and 7%—today that number is 12. In 2006, 15 states had rates below 5 percent, including those with no tax on wage income; now the number stands at 25. In 2006, only one state had a double-digit top rate, whereas seven does did today, after the passage of the millionaires’ tax. Twenty-three states had reduced their top marginal income tax rates since 2021, while six states and the District of Columbia had raised them.
Walczak wrote that the divergence increased the risk for high-tax states where taxpayers sought to avoid high taxes or to secure jobs and opportunities in lower-tax environments where they had more options than ever before and greater incentives to move. States like Florida and Texas continue to attract new residents, but the growing number of states with competitive income tax rates provided additional options for people which could accelerate outmigration from high-tax states, he added.
Let’s Go Washington fights to repeal the income tax
The Washington State Supreme Court has agreed to review an emergency petition brought by Let’s Go Washington after the political action group was denied a referendum to repeal SB-6346, the income tax bill signed into law by Governor Bob Ferguson on March 30.
“At the direction of the Court Commissioner, the emergency motion for accelerated review is granted,” correspondence from the Supreme Court reads according to Brian Heywood, founder of Let’s Go Washington.
The court will consider petition of writ of mandamus at its April 30, 2026, en banc conference which means the whole court or at least a quorum of the court will rule on the matter. The attorneys for the Secretary of State’s Office have until April 14th to reply to Let’s Go Washington’s petition that must be filed no later than April 10.
“We expect a decision then by the end of the month on our ability to run a referendum,” Heywood shared.
The petition requests the Court to compel the Secretary of State to allow the referendum process to commence. If successful, Let’s Go Washington has until June 10—just weeks away— to submit at least 154,455 eligible signatures to qualify for the November 2026 General Election ballot.
Heywood is asking Washingtonians to pre-order signature sheets to expedite the signature collection process.
“We need our army to be ready to collect signatures ASAP so please pre-order your petition packets today so we can move quickly should we win our case,” Heywood released in his statement.
An item of contention by Let’s Go Washington and bi-partisan critics, besides alleging the unconstitutionality of the income tax bill, lies with its “necessity clause” which normally blocks a referendum.
A referendum allows voters to reject a law already passed by the Legislature. Citizens collect signatures to force the law onto the ballot for an up-or-down vote and is considered the “people’s veto” process.
According to page 109 of SB-6346, “NEW SECTION. Sec. 1208. The tax imposed in this act is necessary for the support of the state government and its existing public institutions.”
Once this is included in a bill’s language, the law takes immediate effect (or on its stated date) and cannot be referred to voters for a repeal vote—aka a referendum. This is a common legislative tactic, though critics argue it’s often abused for non-emergency policies such as with the now signed income tax law that does not take effect until 2028.
According to Article II, Section 1(b) of the Washington Constitution: “…the referendum… may be ordered on any act, bill, law, or any part thereof passed by the legislature, except such laws as may be necessary for the immediate preservation of the public peace, health or safety, support of the state government and its existing public institutions….”
Let’s Go Washington argues that Secretary of State’s Office is misinterpreting Article II, Section 1(b) of the Washington Constitution regarding the eligibility for a referendum by the people.
According to the Secretary of State’s Office the Washington State Supreme Court has long interpreted the ‘immediate preservation of the public peace, health, and safety’ clause and the ‘support of state government and its existing public institutions’ clause as independent. Let’s Go Washington attests these are not independent but conditionally dependent.
The Washington State Supreme Court since 1961 in Hoppe v. Meyers has long interpreted Article II, Section 1(b) of the Washington Constitution as creating two separate and distinct exceptions to referendum power:
- One for laws necessary for the immediate preservation of the public peace, health, or safety (requiring an actual emergency), or
- One for laws necessary for the support of state government and its existing public institutions (which does not require immediacy).
The nine-person 1961 Supreme Court was well balanced with three justices either appointed by a Democratic governor or aligned with Democratic Party ideology; whereas four justices were either appointed by Republican governors or aligned with conservative principles.
Since the unanimous en banc Hoppe v. Meyers decision, the Supreme Court has read an “or” into the text before “support” just prior to “or safety” and has consistently treated the clauses as independent alternatives. It has subsequently reaffirmed this interpretation in the following cases:
- Farris v. Munro, 99 Wn.2d 326 (1983) (“This court has consistently analyzed this language as creating separate and distinct exceptions, [citing Hoppe]).
- Washington State Farm Bureau Federation v. Reed, 154 Wn.2d 668 (2005).
- Most recently, Eyman v. Hobbs (No. 104117-9, slip op. Nov. 6, 2025), which again described the provision as containing “two separate and distinct exceptions.”
If Let’s Go Washington fails to convince the Supreme Court to overturn precedents or fails to turn in the required signatures if the referendum is allowed, it can elect to pursue an initiative to repeal the income tax.
An initiative (by the people) can propose a new law or amendment to repeal the income tax law as there is no exemption for initiatives based on emergency clauses. However, the signature threshold is double that of a referendum with 308,912.
Let’s Go Washington can elect for an Initiative to the People which would require valid signatures by July 2, 2026 (three additional weeks from the June 10 deadline of a referendum) to qualify for the November 2026 General Election; or an Initiative to the Legislature which would require valid signatures by December 31, 2026. If the legislature fails to adopt the Initiative to the Legislature, it will appear on the 2027 November Election ballot.
Since 2023, the Secretary of State has qualified nine initiatives by Let’s Go Washington of which four were adopted into law and two will be on the November 2026 ballot:
- IL26-001 — Strengthen Communication Between Parents and Schools (re-enact original I-2081 parental rights language). Status: Qualified for the November 2026 ballot (voters will decide).
- IL26-638 — Protecting Fairness in Girls’ Sports (require biological sex verification for female-designated interscholastic sports; bar biologically male students from female categories). Status: Qualified for the November 2026 ballot (voters will decide).
- I-2066 — Stop the Gas Ban / Protect Energy Choice (natural gas access for utilities and customers; repeal certain building/energy code restrictions).
Status: Passed by voters (52% Yes) and adopted into law. - I-2081 — Parental Rights / Parental Notification (rights to review school materials/records, notifications, opt-outs).
Status: Adopted by legislature (became law without ballot vote; later partially amended, leading to the 2026 follow-up). - I-2109 — Repeal the Capital Gains Excise Tax.
Status: Rejected by voters. - I-2111 — Prohibit State (and local) Income Taxes.
Status: Adopted by legislature (became law without ballot vote). - I-2113 — Reasonable Police Vehicular Pursuit (remove certain restrictions on pursuits).
Status: Adopted by legislature (became law without ballot vote). - I-2117 — Stop the Hidden Gas Tax / Repeal portions of the Climate Commitment Act (cap-and-invest / carbon credit trading).
Status: Rejected by voters. - I-2124 — Opt Out of WA Cares (long-term care payroll tax/program).
Status: Rejected by voters.
Almost 4 million Washingtonians have signed Let’s Go Washington initiatives yielding a 57% success rate (4 of 7 initiatives). According to the PDC, as of March 2026, Let’s Go Washington has spent $22,139,745.11 on changing Washington state law with its founder Heywood personally contributing $13,436,457.15 plus hundreds of hours in lobbying efforts.
At a legislative preview hosted by the Washington State Association of Broadcasters and Allied Daily Newspapers of Washington in January 2023, House Speaker Laurie Jenkins (D-Tacoma) shared her disdain for Let’s Go Washington and specifically its founder, Heywood, comparing their efforts to the “Robber Barons” of the 19th century.
“I am very sadden when I think about why the initiative process was established in this state… It was really like the big railroad barons that folks didn’t want taking over this state,” Jenkins said. “Now what we have is an ultrawealthy, multi-millionaire trying to buy his way onto the ballot.”
Author: Mario Lotmore
