October 5, 2021

Washington Supreme Court Upholds Progressive Tax on Large Banks

Pacifica attorneys Greg Wong, Kymberly Evanson, and Michelle Vaughan represented working family, labor, and BIPOC community organizations as amicus curiae.

The Washington State Supreme Court has upheld a 1.2% tax on financial institutions with annual profits of at least $1 billion. The Washington Legislature passed the tax in 2019. The banking industry immediately sued, claiming the tax violated the Commerce Clause of the U.S. Constitution. The Supreme Court rejected those arguments, in part because the banks only pay tax on the portion of their profits attributable to their activity in Washington State.

Pacifica attorneys Greg Wong, Kymberly Evanson, and Michelle Vaughan represented the Washington State Budget & Policy Center, the Washington Black Lives Matter Alliance, the Children’s Alliance, the Statewide Poverty Action, Balance Our Tax Code, SEIU 775, and the Washington Community Alliance as amicus curiae on appeal.

The amicus brief focused on the state’s legitimate interest in creating a more balanced tax code. Washington State has one of the most regressive tax codes in the nation, with the burden falling disproportionately on people of color and low- and moderate-income Washingtonians. Amici argued that the legislature’s desire to impose a more progressive tax—taxing only banks with over $1 billion in profit—was a legitimate interest that supported the constitutionality of the law. The Washington Supreme Court agreed with the State and Amici, unanimously upheld the tax, and noted that a tax based on ability to pay is not discriminatory. To learn more, see the Court’s opinion and read more here.