Two suits on state capital gains tax joined in Douglas County court

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WATERVILLE — Two lawsuits opposing Washington’s new capital gains tax are now one.

Douglas County Judge Brian Huber ordered both cases challenging the tax law consolidated into a single suit today in a Superior Court hearing. However, he’s still being asked to rule on whether the case should be moved to Thurston County, or even be dismissed altogether. Those issues will be decided after a future hearing.

“This is a one-judge county,” Huber told attorneys on the cases in a Tuesday Zoom call. “We’ve got a weekly calendar that takes place, and as much as we enjoy diving into cases that involve matters like this, it does take some time.”

The tax, scheduled to go into effect Jan. 1, would take 7 percent of annual long-term capital gains on the sales of stocks and bonds that exceed a $250,000 annual threshold. The state says it will affect only the wealthiest Washingtonians, less than 0.25 percent of the population. Opponents say the measure is an unconstitutional income tax under the Washington constitution.

The conservative nonprofit Freedom Foundation filed the first suit against the tax in Douglas County in April, representing seven plaintiffs including Maryhill Winery owner Craig Leuthold of Spokane, Seattle property magnate Suzie Burke, and Freeland investor and former E*Trade boardmember Lewis E. Randall. Developer Chris Quinn, the lead plaintiff, is the sole Douglas County resident involved in the lawsuit.

In May, Orondo orchardist and president of the Chelan-Douglas Farm Bureau April Clayton sued along with eight other individuals plus the Washington Farm Bureau to stop the new tax from going into effect. Both sets of plaintiffs agreed to merge the lawsuits, with no objection from lawyers from the state or other groups with an interest in the case.

Those groups, seeking to join the lawsuit as intervenors, include the Edmonds School District and the Washington Education Association. They say the new tax law “will invest billions of dollars in our state’s children.” Huber said he will issue a ruling by letter on whether they may join the suit.

“I want to take a closer look at not just the rule, but the case law that’s been cited by the parties,” Huber said.