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NTUF Files Amicus Brief in Washington State Income Tax Case

Earlier this year, taxpayers won in Washington State when a state judge struck down a $500 million capital gains tax that state officials claimed was an “excise tax” rather than an illegal income tax. National Taxpayers Union Foundation’s Taxpayer Defense Center submitted a key brief and argued the case in Douglas County Superior Court. That win is now being appealed to the state supreme court, and NTUF along with academics and policy experts across the nation have filed an amicus brief in the appeal. NTUF’s brief explains why it should be accepted in the appeal of Quinn v. Washington.
 

“What’s in a name? That which we call a rose by any other name would smell as sweet,” Shakespeare famously wrote. William Shakespeare, “Romeo and Juliet,” act II, scene 2. Or as James Whitcomb Riley put it, “When I see a bird that walks like a duck and swims like a duck and quacks like a duck, I call that bird a duck.” Roses and ducks have defined characteristics and 5 functions inherent to what they are, and retain those even if a Legislature or an attorney chooses to call them by a different name. Taxes are often the subject of definitional disputes… This is not just a matter of semantics. Taxes that are mislabeled violate transparency by depriving taxpayers of information needed to make meaningful choices about policy. A good tax system is one where taxpayers easily understand what a tax is and how it operates, and subterfuge about these matters prevents that.

This tax was set up as a 7 percent “excise tax on capital gains” to avoid an 80 year-old court ruling that income taxes violate Washington’s constitution. 
 
“The state is arguing with all sorts of twists and contortions that a tax on capital gains isn't an income tax, when it is,” NTUF Executive Vice President Joe Bishop-Henchman says. “This brief adds some common sense on that score by national experts and academics.” NTUF has been joined by the Washington Policy Center and a number of leading economists and tax policy experts on the case.

As NTUF has successfully argued before, the tax is a form of income tax, as it is levied on individuals, not transactions. Additionally it would have deductions similar to income taxes and tracks federal income tax filings. Essentially, if it walks like an income tax and talks like an income tax, it should be treated as an income tax. 
 

Click here to read more about the continuing legal actions in Quinn v. Washington