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Will US Supreme Court weigh in on WA capital gains tax?

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The legal battle over Washington's new capital gains tax isn't over yet.

The Washington State Supreme Court upheld the new capital gains tax in a 7-2 decision earlier this year. The state taxes the sale of certain assets — such as stocks and bonds — worth more than $250,000.

Now, the Freedom Foundation, a conservative think tank, is appealing that decision. In a petition filed with the U.S. Supreme Court on Monday, the foundation is questioning the state's constitutional authority to tax out-of-state transactions under the federal Commerce Clause.

"What Washington state has done, in this law and in this ruling from our Washington State Supreme Court, has implications certainly far beyond the borders of Washington," said Brian Minnich, Freedom Foundation's executive vice president.

The Washington court's majority decision addressed those concerns, writing that the tax complies with the federal policy. Experts who worked on the new tax also point to similar taxes in other states that remain in place.

Andy Nicholas, a senior fellow at the Washington State Budget and Policy Center, said there's a chance the federal court won't take the case. But he also said that the challenge puts more than $800 million already collected through the tax for child care and school construction funding at risk.

"We should all hope that this challenge fails because it would be very bad for communities across our state," Nicholas said.

A decision on whether the U.S. Supreme Court will consider the appeal could come this fall.

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