Since Washington adopted its new income tax in March, the law has continued to generate intense debate. Yet with a constitutional challenge pending and a repeal measure headed to voters, many are asking a simple question: Will anyone ever pay it?

Even if the tax survives, it will not be assessed until 2028, with the first payments due in 2029.

A brief recap of the new tax law – referred to as the “Millionaire’s tax” – and the controversy surrounding it is warranted.

Despite its nickname, the law does not impose a tax on millionaires per se. Rather, it imposes a 9.9% tax on income exceeding $1 million per year. So, there are a lot of “millionaires” (people having over $1 million in investable assets) who will not pay the tax.

The law also creates a significant marriage penalty. For example, an unmarried couple earning $1 million each would owe no tax. If that same couple were married and earned a combined $2 million, they would owe approximately $99,000 in taxes on the income over the $1 million threshold.

The tax applies to both earned income and short-term capital gains. This distinguishes it from Washington's existing capital gains tax, which applies only to certain long-term capital gains.

Many taxpayers earning less than $1 million per year could benefit from the new law.

The law benefits owners of very small businesses by raising the B&O filing threshold to $250,000 and expanding the small business B&O credit.

It also eliminates sales tax on grooming and hygiene products, over-the-counter medications, diapers and certain professional services, including website development, temporary staffing and security monitoring. Additionally, it expands the Working Families Tax Credit.

Whether these benefits are enough to make an income tax regime palatable is, of course, a separate question.

Litigation challenging the new tax filed in Klickitat County will move forward in due course – more slowly than we might like. As of the writing of this column, there is no published case schedule.

The plaintiffs contend that the income tax is unconstitutional because it violates the “uniformity” requirement of Washington’s Constitution and exceeds the 1% cap on property tax levies.

While each of these arguments follow a logical thread, the first argument – regarding uniformity – receives more attention and is generally thought of as a stronger argument.

The “uniformity” argument stems from Culliton v. Chase, a case from 1933. In this case, the Washington Supreme Court interpreted Article 7, Section 1 of the Washington Constitution which states that “all taxes shall be uniform upon the same class of property….”

The court decided that the graduated income tax – passed by 70% of Washington voters in 1932 – was unconstitutional because “income” is “property” which must be taxed uniformly at a flat rate or not at all. Thus, critics of the new tax argue that the state cannot constitutionally tax income above $1 million differently from income less than $1 million.

Notably, the Culliton case was close – a 5-4 decision. Four members of the court would have found that “income” did not meet the definition of property and that the graduated income tax was constitutional.

While there may be other avenues that Washington courts could take to uphold the newly adopted income tax, there is a reasonable chance that the Court will overrule Culliton and hold that income is not “property” as the term is used in Article 7, Section 1. A final answer is unlikely before 2027 at the earliest.

Another reason the income tax may never take effect is Initiative 645. On July 15, the Washington Secretary of State certified Initiative 645 for the November ballot. If it passes, it will repeal the revenue-generating provisions of the new income tax while leaving the associated tax cuts in place.

I-645 also seeks on its face to prohibit any tax on “money derived from an individual’s capital, labor, property or other source.” While this might appear to repeal the recently adopted Washington long-term capital gains tax, whether it does so is doubtful and would undoubtedly trigger further litigation.

Currently, the language that will appear on the ballot for I-645 is the subject of litigation. The state seeks to include the following public investment statement: “This measure would decrease funding for public K-12 education, higher education, and human services.”

Supporters of I-645 dispute that characterization, arguing that the initiative would instead save the state money. The outcome of that dispute could be significant, as the statement may influence how voters perceive the measure and could impact the initiative’s chance of passing.

Will any of us ever pay Washington income tax? That remains an open question. Conventional wisdom suggests the tax is likely to survive the pending court challenge, but the outcome is far from certain. If voters approve I-645 in November, however, the answer will likely be “no,” at least for the foreseeable future. Until then, the saga continues.

Shea Meehan is an attorney and the director of planning at Cornerstone Wealth Strategies, headquartered in Kennewick and servicing clients nationwide.