Washington In Focus Daily | 4.21.26 | Exclusive: Inside The Plan To Expand The Income Tax

Hinzugefügt: 2026-05-05

[00:00:03]Welcome to Washington and Focus Daily.  It's April 21st and I'm your host, Tim Clausner. New questions are emerging around  Washington's push for an income tax as internal communications reveal how far some lawmakers  were willing to go to make it happen. Tonight, we're breaking down two major developments.  First, the newly signed income tax targeting high earners. And second, the legal battle that  could determine whether income taxes expand even further in the state. Newly obtained documents  reveal communications between lawmakers and the state attorney general's office about challenging  long-standing legal president. Specifically, a nearly century old ruling that defines income  as property under Washington's constitution. That matters because if that president is overturned,  it could open the door to a broader income tax beyond just top earners. We spoke with this center  squares TJ Martinell and citizen action defense fund attorney Jackson Maynard about what these  documents could mean for the future of income tax policy in Washington. First, here's the center  squares Carlen Johnson speaking with TJ Martinell about what he uncovered through a record request  involving the Washington State Attorney General's office. JJ, the one of the main questions  I know during the legislative session from um reporters, not just from the center square, but  other reporters was, you know, you're passing an unconstitutional income tax. Uh what of that?  Do you feel okay about doing that? You raise your right hand when you take your oath of office  to uphold the Constitution. Um, can you speak to anything you saw in those documents you obtained  about whether in fact crafters of the legislation were at all concerned about constitutionality? I  don't think that there was any question about the constitutionality um among the lawmakers um or  AGO staff because they also provided legal memos that kind of outlined the arguments that they're  going to make in front of the state supreme court.

[00:01:56]And in their opinion, they think that Colton and  the subsequent, they basically think that the state supreme court has been wrong for a century  on whether or not income's property. I think the one thing that kind of struck me is there was  an email sent. So, Senator Peterson, who was a sponsor of the millionaire's tax, sent a draft  copy of it to solicitor general Noah Purcell, interested in his thoughts on it in so far as its  objective is overturning Colton. And Noah Purcell sent a lengthy email giving his thoughts and it  ended with him noting that there was no emergency clause in the bill and he was you know he didn't  outright advise it. He just noted if you pass it and there's no emergency clause then they'll  potentially you can have a referendum where the voters can overturn it during that November  election. He does say he thinks that anything dealing with revenue should have a referendum  but he was noting that the states uh secretary of state's office will not do that. uh without  an emergency clause. It needs to have one. So, I just go ahead. Yeah, go ahead. I was just  gonna say, so let's just be clear there. Noah Purcell is giving guidance to Senator Peterson,  the sponsor of the bill, basically saying I'm not suggesting you attach an emergency clause here,  but if you did it, it would make it, you know, the Secretary of State probably isn't going to  allow referendum to go forward. So, hint hint, wink, nod, whatever. you might want to attach  this. Is that what your sense is of what you Yeah, I think I think the thing is that they're as  attorneys, they're there to uh you know, advise their clients and we have to keep in mind that  the that uh Senator Pearson and the legislature is a client of the attorney general's office.  So, they're providing legal advice on on this matter. And so this is I just found it interesting  that that was something that was noted, but and it really I mean it does raise the question of  how many other bills that have been passed with emergency clauses that prevent a referendum were  done were added at the suggestion of the attorney general's office. And I wonder how many times  crafters of of bills go to the AG and say, "Hey, this is what we're going to try to do. Can you  give us some advice here?" I mean, is that common practice? I think the thing that Well, I think  the thing that's they did send or did request legal memos to say, "Hey, what's the legality of  a proposed millionaire's tax and will it stand up to legal scrutiny?" But what's interesting in this  regard is a lawmaker is asking his his attorneys, the attorney general's office to help him craft  a bill that will overturn a a court decisions, which is different from saying, "Hey, I want to  craft this bill, but I want to make sure it's going to, you know, stand up to legal scrutiny."  And their basis is effectively this idea that the state supreme court will overturn Colin,  not whether or not it they're not challenging the fact that it doesn't violate Colin. their  argument is co that the colatin decision was uh wrong and that the other decisions that  agreed with it are wrong and they make their case in these emails and legal memos that I've  obtained. And so that's that's the the the frame of discussion. It's not whether this millionaire's  tax is legal under state supreme court president.

[00:05:14]They're admitting that it's not. What they're  hoping is that it will this will trigger a lawsuit which it has that will force the state  supreme court to address the question and there so they said don't call it an excise tax that's  going to just cause confusion. They did that with the capital gains tax where the state supreme  court was able to avoid dealing with addressing colin because they just said it's an excise tax  so Colton decision doesn't apply. So that's where it was specifically crafted so that it couldn't  be overturned under any other circumstances. That was the hope. What's going to be fascinating  is to find out what the response is going to be in the next 24- 48 hours because if you will  characterize I mean you've done a gazillion public records requests as an investigative reporter.  You get documents back all the time. How would you characterize this batch of documents that  you received maybe versus what you expected to get compared to some other big cases you've  worked on? I I didn't expect to receive the the amount of records that I got. And I also  I think I what we're seeing here I think the the bigger broader context is that voters have  rejected a progressive income tax in our state because something to keep in mind is a flat rate  income tax is legal. A progressive income tax is not if Colton decision is upheld. And so voters  have rejected this numerous times. And here you have state lawmakers wanting and working with  the attorney general's office to figure out how to get around the fact that voters have rejected  it. Um if they thought voters would support it, then why not do uh some sort of initiative or or  constitutional stuff. I because that's the problem is they'd have to go through a constitutional  amendment to get around this issue. And so this is allowing them because what will happen is if  Colton is overturned, they can pass a progressive income tax at any rate to everyone and anyone  by a simple majority vote of the legislature.

[00:07:15]So I can't wait to hear what reaction is going  to be in the next couple of days to all of this, TJ, and and for folks whether they're  supporters or opponents of the income tax, how this is going to play into all that and and  the legal case moving forward. Right. We've got the We've got the Citizen Action Defense Fund  suit and um former AG Rob McKenna and former state supreme court justice Phil Townage kind  of leading that champion um championing that.

[00:07:41]I can imagine that um this is going to be playing  into the arguments going forward. So, good work on you getting it all. I appreciate you coming on  today for this episode of Washington in Focus.

[00:07:53]As the legal fight moves forward, the outcome  could shape not just this tax, but the future of income taxation in Washington. Now, we turn  to TJ Martineell's interview with KADF's Jackson Maynard, discussing what these documents reveal  about behind-the-scenes conversations and how they could impact the ongoing legal challenge to  the new income tax legislation. Jack, thanks for taking the time to chat about my story, which um  is available on the senatorsquare.com News site.

[00:08:22]So, what we found is or what what I received  was 988 pages of uh documents and emails of communication between the attorney general's  office and state uh legislators, specifically Senator Jamie Peterson uh from Seattle. And  it was discussing the millionaires tax. And what was so unique about these communications is  that they explicitly say that the purpose of the tax wasn't to collect revenue to fund certain  programs, but to get a 1933 uh state supreme court decision named Colin overturned which  would allow for a progressive income tax. So, you know, you've you everything's on the website  now. The emails are there for people to read and uh uh and download. So, what what was  your reaction when you read those emails?

[00:09:08]Yeah, I you know I think it confirms what  was the worst kept secret in Olympia, which is that this entire piece of legislation was  specifically designed to force a reversal of a 100 years of case law. And I think it's a little bit  of a situation where, you know, like the line from Casablanca, uh we now we now know that there's  gambling going on in the casino. And so, you know, it's a peak behind the curtain at at at that  process. Um, so, you know, I obviously legislators have a right to to introduce bills and if they  disagree with uh, you know, constitutional rulings of the court, um, you know, part of their job,  I think, sometimes is to test those boundaries.

[00:10:02]I think what is a little bit odd here is um that  you have the attorney general you know helping them in in that process and I you know I know  that attorneys within the AG's office represent agencies uh and they should it really raises  the question what is the appropriate role of the attorney general um in constitutional cases  and in advising on on constit constitutional legislation and do they have uh the right and the  duty to advise um other constitutional officials that no no you you can't do what you're going  to do because it would violate the constitution and I think there is some discretion there and you  don't have to look any further than 2016 when then attorney general Bob Ferguson refused to defend  state law uh in response to a tax that the city of Seattle had passed on um on firearms. And you  know that you can agree or disagree on whether or not that's good policy, but the larger issue  is the attorney general at the time said, "Look, um I I so disagree with um the state of the law  that I'm not even going to bother to defend it um here and and to, you know, and to just sort of go  with what the legislative body in that instance, the Seattle um you know, city government.  I'm I'm not even going to bother to to try to um challenge their actions there. And um so,  you know, I think the AG's office um seems to be exercising discretion in a very political way uh  instead of doing what they should be doing, which is to defend the law of the state of Washington  and defend the Constitution. Yeah. I think what really struck because we we really almost have  to pull back because and and see this was this on in in in theory or on paper, the millionaire's  tax is supposed to provide revenue to fund certain programs. That's that's what a tax should be. But  this isn't even trying to change tax policy and it's not trying to socially engineer anything.  This tax is is has written specifically and very carefully so that it would force the state  supreme court to take up this issue. And what was interesting is how the attorney general's office  didn't say but like you know because an attorney could have said you know what um I can advise you  on what what you can do and here's some stuff but I I don't feel comfortable advising you on how  to get legal president and I think that that's the other thing. This isn't some decision that was  made 5 years ago. This wasn't a decision that was made 10 years ago or 50 years ago or even 70 years  ago. It was made back in 1933. And not to mention the fact that it's not like this was just one  decision that's been made over the last century.

[00:13:06]There's been numerous Supreme Court rulings. One  was very, very concise. It just said if you want a progressive income tax, go to the voters and they  have gone to the voters and the voters have said no every single time at least since the 30s. And  so that's really just raises this question of you know what is actually going on as far as you know  um how I mean is this it seems like it's really walking this fine line of of ethical behavior of  what behavior I'm sorry it's it's almost like an attorney who's advising their client client how  to do something that according to president is illegal I mean, that's kind of what isn't isn't  that what they're doing? They're basically saying, "Yeah, this is illegal, and we're going  to help you tailor it so it could get declared." It almost reminds me of that line from  Phantom Menace, you know, where Palpatine says, "I will make it legal." Right. Yeah. Yeah.  Well, I mean, there's a there's a line too of um and I I don't know if this comes from Napoleon  or or someone from that era, but there's there's the law and then there is what is done. Yeah.  And there's a little bit of that of the idea that um well, I mean, yeah, I think a better analogy  is probably Pirates of the Caribbean that the more like guidelines and actual rules.  Yeah. The Constitution is just guidelines, right? Like the pirates code. I mean,  the the fact of the matter is, you know, it should be taken seriously and it should have  been incorporated into the advice that they were providing. And so, I think I think that's  concerning. I thought it was also a little weird, frankly, that the attorney general is advising  um the legislature on how to get around public scrutiny and the opportunity for the public  to weigh in by saying, "Oh, by the way, you may want to include this cause, otherwise the  people might have a chance to um challenge this with a referendum." And again, it's it's not  really Well, also, what does that speaking of which what does that tell you about what he thinks  of what the voters are going to say? Well, I mean, because if if they think that the voters support  this, well, okay, great. Let's run a referendum.

[00:15:26]Let's let let's let the people demonstrate that  they support this tax. Well, I think the fact that the voters have rejected it so many times  is why he gave that specific advice of, hey, if you don't want to have them potentially shoot  this down once again, um here's here's a drafting suggestion you could have to prevent that. So,  um yeah, that that was odd. And then the um it was very I think illuminating too the  whole discussion over the marriage tax and how uh and the marriage penalty and how the the  courts have um looked at whether or not state actions are impacting marriage and and penalizing  that in a way that violates the fundamental right of people to marry. And while they did not think  that the way that this was structured uh would infringe on that, I I think that's another, you  know, another concern here. I mean, that the impact of the tax is that individuals would not be  subject to it. But the fact that they're married, uh, if they have a certain income level, um, over  what's in the statute could could penalize them very heavily, I think is another interesting  legal argument on this that clearly they were aware of and ignored. I I think what's going to  be really interesting is how now that this is out in the open, it's really going to change the  debate around the millionaire's tax because the proponents are not going to be able to say, "Oh,  well, it we're just making the wealthy pay their fair share." That's gone forever because this  isn't a bunch of random people speculating who are just these small level bureaucrats. This is  the solicitor general. This is senior counsel for the attorney general's office. this is the prime  sponsor of the bill saying I want this written so it'll overturn colton and force the state  supreme spring vote to take over this issue and so um critics of this can just point out this isn't  this entire bill's purpose is so that everyone is subject to an income tax at any rate by a simple  majority of the legislature yeah the the peak behind the curtain shows that this isn't about  just making the rich pay pay their fair share and going after millionaires they want to go after  everybody in the state and expand it. And this the AG's office is essentially giving them a how-to  manual in in how to accomplish that and expand this thing through some favorable court decisions  uh to every single person in the state. And that that should be really disturbing and troubling,  especially since they argued so much that that's not what this is about. that um that there's no  plans whatsoever to expand it and we see since at least August of 2025 that's exactly what they were  trying to tee up. I think what's also interesting is because there was the Quinn decision uh a  couple years ago where and then the state supreme court upheld a a a an income tax on capital gains  which they called an excise tax and but you it really makes you wonder what did the attorney  general's office advise that bill's prime sponsor when they were working on that of I it just it  raises so many questions and like you were saying this was a peak behind a cur this was a peak you  know to pardon the expression but it was a peak behind an iron curve curtain we weren't supposed  to look past. It was kind of like, you know, the the the curtain um in the Wizard of Oz or  something like that where you weren't supposed to see them having these discussions because these  are the these the people in these emails were talking with the assumption that the public would  never see see this. They would never know that this is going on. Yeah. I and again, you know, the  AG's office certainly um does provide legal advice to to legislators and they they have a lot of um  attorneys that do that and the legislature has has their own uh attorneys um that help with that  process. So, I like your Wizard of Oz analogy.

[00:19:30]I mean, you're definitely kind of seeing the um  the process used to get this thing uh up and uh we get a peek at some of the arguments that they're  going to raise and and sort of the motivation.

[00:19:46]And I I do think it will be ultimately helpful  in our our uh litigation on the income tax suit to have this kind of insight into uh the intent  behind the legislature in um in drafting some of these clauses, right? I think the other thing  that's interesting is let's say this this income tax gets the Supreme Court just says you know  what we're not overturning a century's worth of Supreme Court decisions and you didn't you know  the attorney general's office you didn't make the case that we we needed it gets overturned but  great people are people are already leaving the state over this I mean this was a let's let's put  aside the the amount of time spent preparing the legal memos the communications the use of public  resources to craft a bill intended to uh overturn, you know, Supreme Court decisions, but it even  if it doesn't stay on the books, people are still leaving. And so, what is that economic cost um of  that? I mean, that's another interesting there's just a lot of different things that this  implications and and I'd say consequences, ramifications of this tax um that they're for  for the sole purpose of getting a Supreme Court decision that's been upheld unanimously throughout  its history uh overturned. Yeah. I they seem to be so focused on can we do this or how can we get the  court to overturn uh this decision to allow us to do it. You don't see a whole lot of discussion in  those emails about should we do it? Is this really a good policy? Is this going to be best for the  state? And you're already seeing people vote with their feet and leaving the state. you're seeing  a tremendous push back uh in terms of you know support for the litigation and support for other  efforts by other groups to you know challenge this by a referendum or initiative and so I think the  lack of real discussion of the policy implications of you know is this a good idea um are also  interesting there you know there were gaming you you brought up the capital gains tax um the  discussion in there about how well I don't think you want to label it an excise tax like we did  last time. We were able to sell it then, but you don't want to do it now if your goal is to really  challenge this. We should just call it, you know, what it is. Uh and so there's some gamesmanship  there that uh I think is a little odd. And then they even suggest, you know, other legislation  like a payroll tax, right? Uh that they think is more uh defensible. So yeah, look, uh, you know,  I I get that attorneys are supposed to help their clients meet their goals, but again, I do believe  that the attorney general should have a higher duty and the folks that work for them should have  a higher duty to the law and to constitution uh and should keep the good of the people in mind um  when they're when they're, you know, making these decisions and when they're providing that advice.  And it just it does not appear um it appears that they were narrowly focused on the questions  that uh state senator wanted to ask instead of some sort of the larger issues at later. We'll  continue to follow this developing story. For now, that's been Washington and Focus Daily.  Thanks for joining. I'm your host Tim Clauser.