Washington State Millionaires Tax Lawsuit: Arguments and Precedent

The Washington millionaires tax lawsuit, filed April 9, 2026 in Klickitat County Superior Court, asks a judge to strike down the state’s new 9.9% tax on household income above $1 million on the grounds that it violates the Washington Constitution. The case, Petter v. Washington Millionaires Tax, is led by former Attorney General Rob McKenna and former state Supreme Court Justice Phil Talmadge, and it revives a nearly century-old fight over whether Washington can tax income at all.¹²

What the Tax Does

Senate Bill 6346, signed by Governor Bob Ferguson on March 30, 2026, imposes a 9.9% tax on individual and household wage earnings above $1 million per year. The first million is exempt. The law takes effect January 1, 2028, and collection begins in April 2029. About 30,000 taxpayers are expected to be affected.³⁴ The bill passed on party-line votes: 27–22 in the Senate on February 16 and 51–46 in the House on March 9.⁵

Who Filed the Lawsuit

The suit was brought by the Citizen Action Defense Fund. The lead plaintiffs are Benjamin and Lauren Petter. Ben Petter is president of Blu Water Homes, a custom home builder operating in Chelan, Leavenworth, and Wenatchee; Lauren Petter owns a marketing business. The couple expects to earn above the $1 million threshold when the tax takes effect. Additional individual plaintiffs include Robert and Brenda Mercer, Wyoming residents who own a Washington farm, and Curt Nuccitelli and Beatrice Gasper, who own a trucking company.⁶⁷

Organizational plaintiffs include the Ethnic Chamber of Commerce Coalition, the Yakima Klickitat Farm Association, the Building Industry Association of Washington, and the National Federation of Independent Business. Elizabeth Milito of NFIB said the law “puts small business owners in our state directly in the crosshairs.”⁷²

The Constitutional Arguments

The complaint rests on Article VII of the Washington Constitution and makes two connected claims.

The first is uniformity. Article VII, Section 1 defines property as “everything, tangible or intangible, subject to ownership.” Washington courts have long held that income falls within that definition. Because a property tax must be applied uniformly, taxing income above $1 million at 9.9% while taxing income below it at 0% creates a non-uniform property tax that the constitution forbids.

The second is the rate cap. Article VII limits property tax rates to 1% of value. A 9.9% rate on income classified as property exceeds that ceiling by nearly tenfold.⁸

McKenna argues the legislature “disregards both the plain language of the constitution and decades of consistent Supreme Court precedent.” The complaint also notes that voters have rejected income-tax amendments ten times since 1933, framing the law as an end-run around both the courts and the electorate. The plaintiffs seek a declaratory judgment invalidating the tax in its entirety.²⁷

The Precedent That Controls the Case

In 1932, Washington voters approved a graduated income tax by 70%. The next year, in Culliton v. Chase, the state Supreme Court struck it down 5–4, holding that income is property and that a graduated rate violated both the uniformity requirement and the 1% cap.⁹ The court reinforced Culliton in Jensen v. Henneford (1936) and Power, Inc. v. Huntley (1951), rejecting attempts to relabel income taxes as excise taxes on the privilege of earning income.¹⁰

Under this line of cases, the plaintiffs have the stronger doctrinal position, and both sides expect the trial court to rule against the law. The real question is what the Washington Supreme Court will do on appeal.

The Quinn Wild Card

In 2023, in Quinn v. State, the state Supreme Court upheld Washington’s 7% capital gains tax on long-term asset sales above $250,000. The court classified it as an excise tax on the privilege of selling assets rather than an income tax, so Article VII’s uniformity and 1% cap requirements did not apply.¹¹ Culliton was left technically intact, but the ruling showed a current court willing to redraw lines around what counts as a property tax.

Proponents of SB 6346 read Quinn as a signal the court may go further. Opponents argue the millionaires tax is a different case entirely because it reaches wage income broadly rather than a discrete category of transactions.

The State’s Defense

Attorney General Nick Brown’s office is defending the law. Deputy Communications Director Mike Faulk said the office “will be defending the constitutionality of this law in court and expect to prevail,” and declined to preview specific arguments.⁶ Senate Majority Leader Jamie Pedersen, the bill’s prime sponsor, has said openly that the case will be decided by the state Supreme Court and that backers hope the justices will revisit and overturn Culliton.¹²

The Leaked Emails

Internal emails obtained through a public records request show that lawmakers and the Attorney General’s Office coordinated in designing the tax with the explicit goal of provoking a court challenge. In an August 2025 email to legislative counsel, Pedersen wrote that he expected the bill to “get challenged in court” and wanted to “force the Washington Supreme Court to reconsider its case law that considers income to be property.” He asked for advice on framing the tax as an excise tax rather than a property tax.¹³

Deputy Solicitor General Karl Smith, in separate internal emails, described the state Supreme Court as “as favorable a venue as we’re likely to get” and speculated that some justices might want to “punt” the constitutional question by allowing a referendum instead of ruling directly.¹⁴ A spokesperson for Brown defended the coordination as routine, saying the office is “required by law to represent the Legislature” and “there’s nothing unusual about any of that.”¹³

Timeline and Stakes

The case is in its early stages in Klickitat County Superior Court. Both sides expect an appeal regardless of the trial court’s ruling, and the case is expected to reach the state Supreme Court. McKenna has estimated roughly one year before the high court issues a final decision, placing a ruling around mid-2027. Because tax collection does not begin until April 2029, the courts have room to resolve the question before any money is collected.³

If the Supreme Court upholds SB 6346, it would effectively overturn Culliton and clear the way for the legislature to tax wage income in Washington for the first time in nearly a century. If the court strikes the law down, lawmakers are expected to keep trying to structure revenue measures as excise taxes to work around the constitutional barrier, generating further litigation.¹²

A Separate Repeal Effort

The lawsuit is not the only challenge to the tax. Because SB 6346 contains a “necessity clause” shielding it from voter referendum, opponents led by Let’s Go Washington turned to the initiative process, filing Initiative Petition 26-645 to repeal the tax and bar any future state or local income tax. The state Supreme Court denied a petition to force a referendum on May 4, 2026, without addressing the underlying constitutionality of the tax.¹⁵¹⁶ The initiative and the Petter lawsuit are separate tracks, and a ballot outcome would not resolve the constitutional question at the heart of the litigation.

1
KNKX. Lawsuit Challenges Constitutionality Washington Millionaires Tax
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Citizen Action Defense Fund. Rob McKenna Phil Talmadge and CADF File Suit Against Washington’s Unconstitutional Income Tax
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KUOW. New Lawsuit Challenges Constitutionality of Washington’s New Millionaires Tax
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Bloomberg Tax. Washington State’s Novel Millionaire Tax Signed Into Law by Governor
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Washington State Legislature. SB 6346 Bill Summary
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Washington State Standard. Court Battle Set to Begin Over WA’s New Income Tax
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Courthouse News Service. Washington State Millionaire Tax Faces Legal Challenge
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Tax Foundation. Memo Regarding Proposed State Capital Gains Tax
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University of Washington. Washington State Income Tax
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Washington Policy Center. History of Income Tax Votes in Washington
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Washington Courts. Quinn v. State, No. 100769-8
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Washington Courts. Court Battle Set to Begin Over Washington
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Fox 13 Seattle. Emails WA Millionaires Tax Historic Ruling
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The Center Square. Washington AG Office Emails on Millionaires Tax Strategy
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Cascadia Daily. State Supreme Court Nixes Quick Referendum to Repeal New Millionaires Tax
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Washington State Standard. Income Tax Foes Will Pursue Repeal on Fall Ballot