EXCLUSIVE: AGO memo says 'realistic possibility' a wealth tax would be overturned

“The provisions that pose the greatest risk are the $50 million threshold exemption and the credit for similar taxes paid to another state,” the memo states further.

Under Washington state’s Constitution, all classes of property must be taxed at a uniform rate and no more than 1%, which the legal memo states “placed stringent limitations on the authority of the state and local governments.” While state law allows the Legislature to create exemptions within a property tax, “there remains, however, an unanswered question with respect to the Legislature’s power to enact property tax exemptions by general law. Namely, is that power limited to a “full” exemption or can the Legislature enact a partial exemption?”

The memo also concluded that placing a $10 million cap on the tax would “would increase the chance” of violating the state Constitution.

Washington Policy Center Senior Researcher Paul Guppy told The Center Square that the memo’s author was “being cautious, because it is illegal.”

“What is the point of having a constitution if the leaders of the state don’t follow it?," he asked. "You don’t need to be  lawyer to understand the uniformity clause. The people who drafted it…knew it wasn’t technical. It was plain English.”

Despite the reservations expressed in the memo about the tax’s legality, Guppy said he’s not convinced it won’t eventually clear the Legislature and potentially even the State Supreme Court. He cited the 2023 Quinn decision in which the state’s high court upheld a tax on the income derived from the sale of capital gains by concurring with the Legislature’s claim that it was an excise tax.

“That opinion has all kinds of irrelevant rhetoric about our inequitable tax code and the financial burden,” Guppy said. “Those are all fine as far as having a political opinion goes, but that’s not what justices are supposed to do. If the State Supreme Court leans their way, they could definitely pass a wealth tax in the future.”

Last year, the state Legislature proposed a wealth tax of $10 per $1,000 value on certain financial assets, such as stocks and bonds, over $50 million.

Earlier this year, Rep. Joe Fitzgibbon told The Center Square that “a wealth tax did not have sufficient support to pass out of the House in 2025 and it still does not.” The Center Square reached out to Fitzgibbon for possible comment on whether that remained the case and the possibility of a wealth tax being introduced next session.

Fitzgibbon did not respond to the request for comment.  

Although the wealth tax didn’t pass, the Legislature this year enacted an income tax with an exemption for anyone making less than $1 million a year. That tax now faces both a lawsuit as well as a potential initiative to overturn it after the state Supreme Court blocked a referendum effort.

A separate legal memo written by the AGO for Ferguson’s Office in December noted that the income tax would be placed “squarely within the type of taxes that our Supreme Court has invalidated under the uniformity and levy limit requirements” of the state Constitution.