Fisher Investments’ Texas move is a warning to progressive courts
Activist interpretation of the law hurts business.
Add Fisher Investments to the many new businesses decamping from progressive states to a more welcoming part of the country.
While we’ve long known that companies prefer Texas’ low-tax and business-friendly regulatory environment, the Fisher case adds a new wrinkle that could see more capital and production head our way.
In Washington state, where Fisher had been headquartered, the state Supreme Court decided that the plain language of the law didn’t matter. The progressive justices determined, in a 7-2 ruling, to simply reimagine the longstanding definition of property under state law.
It was the legal equivalent of deciding one day that the grass is blue.
Washington’s constitution has prohibited a graduated income tax since 1933. But its Supreme Court decided that a law taxing capital gains over $250,000 was constitutional because the tax was on the transaction, not on the income gained. So the money someone made by investing their money, time or labor over the long haul isn’t their property?
The goal here was an end-around the state constitution, and it took the Legislature, the governor and the state’s highest court to get there.
Now it is the law of the land. And people who invest in companies that create jobs or securities that fund businesses that create jobs can now expect to have a huge chunk of their gains taken in state tax.
That’s a smack in the face to business owners and investors, and there can be little doubt that Fisher won’t be the last company to decide to move its operations elsewhere.
It isn’t that taxation and regulation are intolerable. They are necessary to the function of a fair society. Businesses everywhere accept that as part of doing their work. But when a business cannot trust the rules of the game, you can expect it to find another place to do its work.
In Washington, the highest court decided that the language everyone had accepted to govern taxation didn’t mean what everyone had agreed it meant. In doing so, it upended part of its own constitution.
That’s dangerous because it suggests that even longstanding, constitutionally enshrined laws are not immune to the redistributive impulses of activist courts. The people of Washington will suffer as capital flows out of the state into places where it is more secure.
Fisher will move its headquarters to Plano, where it has long had a large office and where it will not be subject to the impositions of an additional 7% tax.
“When the Washington State Supreme Court can make extraordinary decisions and overwhelmingly so — seeming to legislate from the bench versus upholding the state constitution — that could allow for anything in the future and probably will,” a company statement said.
That’s not an unreasonable fear.
The Texas Supreme Court has a long reputation of applying the plain text of the law to its rulings. Some may criticize it as business-friendly, but the habit of justices is to look at the clear language in the constitution and statutes as the foundation of intent. The opposite happened in Washington, and the state will pay for it in lost opportunity.
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