Julia Chirkova
The campaign to repeal Washington State’s new 9.9% income tax on households earning over $1 million annually is facing a critical hurdle, as its sponsor, Let’s Go Washington, has filed a lawsuit challenging the official ballot language describing the financial consequences of repealing the tax. The legal action, lodged in Thurston County Superior Court, centers on a 21-word "public investment impact disclosure" that the group argues unfairly prejudices voters against Initiative 645, the measure aiming to overturn the so-called "millionaires tax."
The disclosure, approved by the Attorney General’s office, states: "This measure would decrease funding for public K-12 education, higher education (including universities and community colleges), and human services (primarily healthcare)." Let’s Go Washington contends this language is inaccurate and misleading, particularly as the tax is not scheduled to be collected until 2029, meaning no existing funds are immediately at risk of reduction.
Background: The Genesis of Washington’s High-Earner Tax
Washington State’s journey towards an income tax has been a long and contentious one. For decades, the state relied on a regressive tax structure, heavily dependent on sales tax, which disproportionately impacts lower and middle-income residents. This model had been challenged legally, with the state Supreme Court ruling in 2018 that the state’s capital gains tax on stocks and bonds, imposed in 2021, was an unconstitutional excise tax, not an income tax. However, the court’s ruling left the door ajar for a different approach to taxing high incomes.
In 2021, the Washington State Legislature passed Senate Bill 5096, establishing a 7% tax on annual capital gains above $250,000. This tax also faced legal challenges. Subsequently, in 2023, the Legislature enacted a new 9.9% tax on annual adjusted gross income exceeding $1 million, a move specifically designed to withstand previous legal precedents by focusing on income rather than capital gains and structuring it as an excise tax on the "privilege" of earning such high incomes. This tax is slated to take effect in 2029, with revenue projected to fund early learning and childcare programs.
The Core of the Legal Dispute: Ballot Language and Voter Perception
The lawsuit filed by Let’s Go Washington, spearheaded by Redmond hedge fund manager Brian Heywood, argues that the Attorney General’s mandated disclosure unfairly influences voters. Heywood asserts that the current wording falsely implies an immediate loss of funds for essential services. "You can’t cut money that doesn’t exist," Heywood stated in a press release, challenging the premise of the Attorney General’s disclosure.
Let’s Go Washington’s legal filing proposes an alternative wording: "I-645’s passage would ‘increase funding for the 2026-2027 state general fund, which funds primarily ‘medical assistance-programs, public instruction, and higher education.’" This reframing suggests that repealing the tax would, in fact, lead to a net increase in state funds by eliminating the costs associated with establishing and defending the new tax. These anticipated costs include building a new tax collection bureaucracy and defending the tax against inevitable legal challenges.
The stakes are undeniably high. Public opinion polling in Washington has consistently shown that initiatives framing tax reductions as potentially detrimental to public services often see a significant decline in support. The 21 words in question, appearing directly below the ballot title for I-645, could critically sway voter sentiment in the upcoming November election.
A Legal Challenge Rooted in a 2022 Law
The language at the heart of the dispute is a direct product of a 2022 state law, passed by a Democratic-controlled Legislature. This legislation was specifically designed to counter what proponents described as a historic tendency for tax-cutting initiatives to obscure their consequences for public services. The law mandates that the Attorney General’s office provide a "public investment impact disclosure" for initiatives that propose to repeal or reduce existing taxes or fees. The stated intent was to ensure voters possess a clearer understanding of the potential ramifications of such measures on state and local government funding.
However, opponents of the law, including Heywood and other fiscal conservatives, argue that it represents an unconstitutional attempt by the Legislature to manipulate the initiative process and inject partisan bias into voter information. They contend that these disclosures are inherently biased and serve to undermine the democratic will of the people to enact fiscal reforms.
Broader Implications and Precedents
This is not the first time the constitutionality and implementation of these public investment impact disclosures have been challenged. Last week, prominent open-government activist Arthur West filed a separate lawsuit. West’s legal challenge takes a different approach, questioning the overall constitutionality of the impact disclosure requirement itself. He argues that adding such language after citizens have already signed initiative petitions interferes with the fundamental constitutional right of the people to propose and enact laws through the initiative process. West’s lawsuit posits that the timing and nature of these disclosures constitute an infringement on this right.
A hearing on West’s lawsuit has been scheduled for August 7th. While the precise legal arguments in Let’s Go Washington’s case differ, both lawsuits aim to scrutinize the boundaries and legality of the relatively new ballot language requirements. State law stipulates that a Superior Court judge must render a decision on the final ballot language within five business days of a challenge being filed. As of Tuesday afternoon, a hearing schedule for the Let’s Go Washington lawsuit had not yet been established.
The Attorney General’s office, through spokesperson Mike Faulk, has defended the current ballot wording. Faulk stated last week that the purpose of the disclosures is to "ensure voters receive information about initiatives they are asked to decide." In an email on Tuesday, Faulk indicated that the office "will continue reviewing the challenges and will respond in court."
Andrew Villeneuve, executive director of the Northwest Progressive Institute, a group that supported the 2022 legislation mandating impact disclosures, views the current language as a necessary corrective. He believes the disclosures were intended to address a "historic problem" where tax-cutting measures often failed to adequately inform the public about their potential impact on vital public services. Villeneuve explicitly stated, "I don’t think it’s loaded language," referring to the Attorney General’s disclosure for I-645.
A Pattern of Legal Challenges
The legal skirmishes over ballot language are becoming a recurring theme in Washington State’s political landscape. In 2024, Republicans mounted a similar challenge to an impact statement attached to an initiative that sought to repeal the state’s new capital gains tax. That initiative, also sponsored by Let’s Go Washington, ultimately failed, with 62% of voters rejecting it. The legal challenge to the capital gains tax repeal initiative was unsuccessful, and the impact statement remained.
The current lawsuits by West and Let’s Go Washington represent a renewed effort to test the legal framework surrounding these disclosures. The outcome of these legal battles could significantly shape the future of initiative campaigns in Washington State, influencing how voters are informed about the potential financial consequences of their decisions on tax policy and public services. The decisions made by the Thurston County Superior Court will have far-reaching implications, potentially setting precedents for future legislative and citizen-initiated measures that seek to alter the state’s fiscal landscape.
The complex interplay between legislative action, citizen initiatives, and judicial review underscores the ongoing debate about fiscal responsibility, the role of taxation in funding public services, and the mechanisms by which voters are informed about these critical policy choices. As the legal challenges unfold, the public will be watching closely to see how the courts interpret the balance between the right to propose initiatives and the imperative of providing voters with comprehensive and unbiased information. The impending decisions are poised to influence not only the fate of Washington’s high-earner tax but also the very process of direct democracy in the state.
