When the Washington state Supreme Courtroom says it’s not.

However in 2021, the [Washington] state legislature ignored the plain language of the structure, plus many years of precedent, to impose a particular 7 p.c tax on one sort of revenue, capital good points. That blows by the constitutional strictures in two methods.

First, as we just about all discovered in first grade if not earlier, seven is bigger than one. Second, as a result of the tax is on the a part of a capital achieve that’s above $250,000, it’s not uniform. So you’ll assume the state’s Supreme Courtroom would simply bat down that tax. In that case, you’ll be fallacious. On March 24, the Supreme Courtroom voted, by a lop-sided 7-2 margin, to uphold the constitutionality of the tax.

How did the seven justices—I take advantage of that phrase loosely—justify their determination? Easy. They claimed {that a} tax on revenue was actually an excise tax. Debra L. Stephens, one of many justices, wrote, “The tax is constitutional as an excise as a result of it’s levied on the sale or trade of capital property, not on capital property or good points themselves.”

Excuse me? If it have been an excise tax, it will be levied on the sale of an asset. However the plain language of the legislation that the justices upheld says that it’s levied on capital good points.

That is from my newest piece for the Institute for Coverage Innovation, “When Is Earnings Not Earnings?TaxBytes, April 27, 2023.

Learn the entire factor, which isn’t lengthy.

Supply hyperlink