An effort to balance what is considered the nation's most regressive state tax code came before the Washington Supreme Court on Thursday, in a case that could overturn a prohibition on income taxes that dates to the 1930s. Washington is one of nine states without an income tax, and its heavy reliance on sales and fuel taxes to pay for schools, roads and other public expenses falls disproportionately on low-income residents. They pay at least six times more in taxes as a percentage of household income than the wealthiest residents do, according to lawmakers, and middle-income residents pay two to four times as much. Democrats in Olympia, led by Gov. Jay Inslee, sought to begin addressing that in 2021, when they enacted a 7% capital gains tax on the sale of stocks, bonds and other high-end assets, with exemptions for the first $250,000 each year and gains from sales of retirement accounts, real estate and certain small businesses. It was expected to be paid by 7,000 people — fewer than 1 in every 1,000 residents — and to bring in close to a half-billion dollars a year to help pay for public education in Washington. But it faces a legal challenge from wealthy residents and business and agricultural organizations, who say it violates the state and federal constitutions and makes for bad policy to boot. "Washington's unique, unprecedented and unconstitutional tax on capital gains will discourage our state's resident entrepreneurs and investors from investing in new and expanded businesses in our state," the Building Industry Association of Washington and Washington Retail Association wrote in a friend-of-the-court brief. "It will also cause significant numbers of individual business owners to leave Washington to avoid the new tax." READ THE FULL STORY: https://www.king5.com/article/news/politics/state-politics/supreme-court-washington-state-tax-code/281-069a713e-dd54-4abd-a57c-c6e5121d5c00