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One of the most significant state laws that Washington lawmakers passed this year was a new income tax on millionaires.

It's set to raise up to $3.5 billion in 2029, its first year of collection.

But that law now faces several court challenges.

Venice Buhain brings us an update to that story.

BUHAIN (VO): Joe Wallin is a Seattle attorney for startup founders and investors.

Even though Washington's millionaires' tax won't take effect until 2028, he says some of his clients are already asking about how to minimize paying it, including moving to other states.

WALLIN: I mean, these are already people who have second and third homes and they already spend time elsewhere.

And certainly not hard for them to say, well, I'm just gonna spend more time over there.

BUHAIN (VO): Last legislative session, the state passed a 9.9% tax on income over $1 million.

Washington has been one of nine states that doesn't have an income tax, relying instead on sales, business, gas, and other taxes to fill state coffers.

In 1932, voters overwhelmingly approved an income tax, but the Washington State Supreme Court ruled the following year that income should be considered property, and thus that income tax was against the state constitution.

Other attempts to change the tax code since then have failed.

As passed, the millionaires' tax will impose a 9.9% tax on income in excess of $1 million, apply to about 20,000 Washington residents, raise about $3.5 billion in its first year, and start collection in 2029.

So for someone making $1.2 million, they would be taxed on $200,000, which at 9.9% is a bill of $19,800.

Senate Majority Leader Jamie Pedersen and others have called the tax on millionaires a step toward changing Washington's system, where historically, people with lower incomes have paid a greater percentage of their income on sales, gas and other taxes than do people with higher incomes.

PEDERSEN: The millionaires' tax is an attempt to correct that upside down tax system and make it more fair across the spectrum, so that people are paying more according to their ability.

Already, there are two legal challenges to block it.

One filed by Let's Go Washington is trying to get a referendum on the ballot to ask voters to repeal the law.

Another by the Citizen Action Defense Fund says the law violates the state constitution.

Jackson Maynard is the executive director of that second group, which includes former state Attorney General Rob McKenna, a Republican and former state Supreme Court Justice Phil Talmadge, a Democrat.

MAYNARD: He's in favor of an income tax or reforming the tax code in Washington.

But the proper way to do it is to amend the Constitution to allow for an income tax, if that's what you want to do.

BUHAIN (VO): Pedersen says one of the goals of this bill was explicitly to challenge a decision that income is property.

PEDERSEN: That is the question that we're trying to put before the court again, because in the 93 years since that ruling, almost no other court in the country has followed that logic.

BUHAIN (VO): But Wallin says his clients will be keeping a close eye on what happens to the tax in the next few years.

WALLIN: We're going to have a public experiment.

We're going to see how many people move for tax purposes.

We'll see if people move.

Some people don't think people will move.

I already know many people have moved.

And I know any more who are planning to move.

BUHAIN (VO): Pedersen argued that Washington has not become less competitive, just more in line with the 41 other states that have an income tax.

And lack of income tax is not the only thing job creators consider.

PEDERSEN: Look none of this happens in a vacuum, right.

The whole tax system, both how the taxes get imposed and then whether the taxes are adequate, does it then produce a good transportation system that functions well or a good education system or a strong, early learning system so that people don't have to stay home and can actually go to work, right.

All of those things are important to business, too.

VO: In Seattle, this is Venice Buhain, Cascade PBS.

I'm Paris Jackson.

Thank you for watching.

To see our full week of follow-up stories, visit CascadePBS.org/thenewsfeed.