Washington Millionaires Tax Faces Legal Challenge From Local Builders

Builders argue tax violates state law by taxing income inconsistently with property taxes

Apr. 13, 2026 at 7:04pm

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A cinematic painting depicting a lone construction worker standing in the shadow of a partially built high-end home, the scene bathed in warm, diagonal sunlight and deep shadows, conveying a sense of quiet contemplation and the complex relationship between the state's tax policies and its construction industry.A legal challenge to Washington's new Millionaire's Tax exposes tensions between the state's construction industry and efforts to raise revenue from the wealthy.Chelan Today

A local construction company, Blu Water Homes, and a coalition representing individuals, farming interests, builders, a trucking company, minority-owned businesses, and business groups have filed a lawsuit challenging the constitutionality of Washington's recently passed 'Millionaire's Tax'. The plaintiffs argue the tax violates a nearly century-old state Supreme Court ruling that defined income as property, which must be taxed uniformly.

Why it matters

The lawsuit represents a high-profile legal challenge to the new tax, which is set to go into effect in 2028 and levy a 9.9% tax on annual income over $1 million. The outcome could have significant implications for the implementation of the tax and set a precedent for future income tax measures in the state.

The details

Ben and Lauren Petter, a married couple who own the construction company Blu Water Homes, have joined a coalition in filing the lawsuit against the new Millionaire's Tax. The plaintiffs argue the tax violates a nearly century-old state Supreme Court ruling that defined income as property, which must be taxed uniformly. The lawsuit names Washington state, the Washington State Department of Revenue, and its acting director as defendants.

  • The new Millionaire's Tax is set to go into effect in 2028.
  • The lawsuit was filed on April 9, 2026.

The players

Ben and Lauren Petter

A married couple who own the construction company Blu Water Homes and are leading the legal challenge against the Millionaire's Tax.

Blu Water Homes

A construction company that builds high-end custom homes in Chelan, Leavenworth, and Wenatchee, Washington.

Phil Talmadge

A former Washington State Supreme Court Justice and State Senator who filed the lawsuit against the Millionaire's Tax.

Rob McKenna

A former Washington State Attorney General who filed the lawsuit against the Millionaire's Tax.

Let's Go Washington (LGW)

A conservative group that petitioned the Washington Secretary of State to allow a referendum vote on the Millionaire's Tax, but was denied.

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What’s next

The Washington Supreme Court will decide whether to allow a referendum vote on the Millionaire's Tax proposed by the conservative group Let's Go Washington.

The takeaway

This lawsuit represents a significant legal challenge to Washington's new Millionaire's Tax, with the plaintiffs arguing the tax violates the state's constitution by taxing income inconsistently with property taxes. The outcome of this case could have far-reaching implications for the implementation of the tax and set a precedent for future income tax measures in Washington.