What the Author of ESSB 6346 Said He Was Actually Trying to Do

Key Takeaways

• Pedersen leveraged capital gains tax to challenge Culliton precedent
• 2021 capital gains tax upheld, but classified as excise tax
• ESSB 6346 imposes 9.9% tax on income above $1 million
• 2026 lawsuit questions constitutionality of the new income tax
• Success could enable broader progressive income tax via simple majority

Pulse Analysis

Washington’s tax landscape has been shaped for decades by the 1933 Culliton v. Chase decision, which classified income as property and effectively blocked a graduated income tax. Senator Jamie Pedersen’s 2018 correspondence laid out a tactical roadmap: introduce a capital‑gains tax, provoke a legal challenge, and use the ensuing court battle to erode the Culliton precedent. By framing capital gains as an excise tax, the legislature created a narrow judicial pathway that avoided directly confronting the property‑tax limitation, setting the stage for a broader tax reform agenda.

The capital‑gains tax passed in 2021 survived a Supreme Court review in 2023, which upheld the measure while distinguishing it from ordinary income taxation. Leveraging that legal foothold, lawmakers enacted ESSB 6346, a 9.9% levy on household income exceeding $1 million, slated to begin in 2028 with filings due in 2029. The bill’s language explicitly aims to test the limits of the Culliton doctrine, and internal emails obtained in 2026 show legislators still seeking the most effective route to overturn the precedent. The strategy mirrors historic efforts to reshape constitutional interpretation through incremental legislation rather than a direct amendment.

The pending 2026 lawsuit filed by the McKenna/CADF coalition challenges the constitutionality of ESSB 6346, arguing that the tax violates the property‑tax cap embedded in Washington’s constitution. A favorable ruling could open the door to a full progressive income tax enacted by a simple majority, dramatically expanding the state’s fiscal capacity and altering the tax burden for high‑income earners and corporations. Conversely, a setback would reinforce the long‑standing barrier, preserving the status quo and prompting policymakers to explore alternative revenue streams. Stakeholders—from financial planners to corporate CFOs—must monitor the case closely, as its resolution will shape tax planning and compliance strategies for years to come.