– The Washington Times
Cash-starved states run by Democrats are moving to squeeze more revenue out of their wealthiest residents with a “millionaires tax,” which they say would make the tax code more equitable.
The strategy has growing appeal among House and Senate Democrats, who are pitching populist federal wealth taxes on the richest Americans as they try to win November elections and take control of Congress.
Washington has become the latest state to impose a tax on its wealthiest residents under legislation signed last month by Gov. Bob Ferguson, a Democrat. The law imposes a 9.9% tax on annual income exceeding $1 million. The revenue is intended to fund free school lunches, child care and other initiatives, such as expanded tax credits for low- and middle-income individuals and families.
Most of all, Mr. Ferguson said, the tax “makes our system more fair.”
Maryland, Massachusetts and Minnesota have increased taxes on their wealthiest residents. California, Rhode Island and Connecticut are weighing plans to tax the rich. New York Mayor Zohran Mamdani ran and won on a promise to increase the city’s income tax on its wealthiest residents from 3.9% to 5.9%, which would be paid on top of the state’s 10.9% tax on top earnings.
On Capitol Hill, the concept of a national wealth tax is rapidly gaining support among House and Senate Democrats. They say it is high time for the richest Americans to pay “their fair share” to help fund universal day care, free community college, expanded Medicare and more.
House and Senate Democrats have introduced several wealth tax bills. In March, more than 45 Democrats introduced legislation to tax “fortunes above $50 million.” The bill would tax “net worth” and raise $6.2 trillion in revenue over the next decade to pay for expanding social welfare programs.
“While multimillionaires and billionaires are getting richer and richer, families are getting squeezed by a rigged economy. My bill is about basic fairness and making the ultra-wealthy pay their fair share. It’s time for the government to stop listening to the richest of the rich and start working for working people,” said Sen. Elizabeth Warren, Massachusetts Democrat.
Advocates say taxing wealthier Americans raises much-needed revenue for government programs and creates a fairer tax system that shifts the burden further away from low- and middle-income earners.
The left-leaning Institute on Taxation and Economic Policy rated Washington state’s tax system as one of the most regressive in the country based on “share of family income.”
Until the wealth tax was enacted, the state had no personal income tax and relied heavily on property taxes and state and local sales taxes as high as 10.4%.
“It is inspiring to see Washington listening to the demands of the people to create a less regressive state tax system,” ITEP Executive Director Amy Hanauer said.
Democrats have seized on a popular fiscal policy that has become more appealing to low- and middle-income Americans facing stagnant paychecks and higher costs for food, housing and health care.
A Pew Research Center poll taken last year found that 6 in 10 Americans say taxes should be raised on households earning more than $400,000 annually. The results differed significantly by party. Nearly 75% of Democrats and Democratic-leaning independents said taxes should be raised on incomes above $400,000, compared with 43% of Republicans and Republican-leaning independents.
A second poll released Monday found that roughly 60% of adults reported: “the feeling that some wealthy people and corporations don’t pay their fair share bothers them a lot.”
Sen. Bernard Sanders, Vermont independent, has pounced on public discontent with billionaires, who he once said “should not exist.” Mr. Sanders introduced a wealth tax in March.
The Make Billionaires Pay Their Fair Share Act would turn the federal government into a modern-day Robin Hood by zinging the nation’s 938 billionaires with a 5% annual wealth tax.
The money would be spent, in part, on direct payments of $3,000 “to every man, woman and child” in households making $150,000 or less. It would amount to a $12,000 payment for a family of four, the democratic socialist said.
“In a democratic society, we cannot tolerate 60% of our people living paycheck to paycheck — struggling to pay for housing, food and health care — while 938 billionaires have become $1.5 trillion richer,” Mr. Sanders said.
Even Republicans briefly considered a millionaires tax to help offset the cost of the One Big Beautiful Bill Act, which cut taxes across the board for individuals and businesses.
Top Republican leaders and President Trump quickly rejected the idea. They said a tax hike on the rich would be “very disruptive, because a lot of millionaires would leave the country.”
An exodus of wealthy residents is among the reasons a dozen countries that once had wealth taxes have largely abandoned them.
According to the Tax Policy Center, studies of other countries that imposed a millionaires tax “showed a decline in the amount of wealth reported to government authorities” because of avoidance and evasion.
High-income residents of states that have imposed wealth taxes are fleeing to avoid paying more.
Massachusetts sustained a net income loss of $4.2 billion in 2024, a year after implementing its millionaire surtax. The Fair Share Amendment slaps an additional 4% levy on income over $1 million.
Voters approved the tax in a 2022 referendum. The revenue is used to fund schools and public transportation.
Analysts at the Center on Budget and Policy Priorities advised against drawing sweeping conclusions about the flight from the Bay State’s wealth tax, as IRS data does not track the exodus of millionaires specifically.
The tax has raised billions more dollars in revenue, the center said, and is funding “transformative investments like universal free school meals, fare-free buses, and affordable child care.”
California lawmakers are debating a one-time 5% tax on the net worth of the state’s 200 or so billionaires, which has triggered a rush for the exits by its richest and most prominent residents.
Some of them, including Meta CEO Mark Zuckerberg and Google co-founder Larry Page, are scoping out or have purchased properties in Florida, which has no income tax.
If voters approve the wealth tax in a November referendum, it will snag billionaires who resided in California anytime after Jan. 1, which explains the stampede.
The Service Employees International Union and the United Healthcare Workers are among the groups collecting signatures to put the billionaires tax on the ballot. The groups said the revenue would help prop up California’s financially strained health care system, fund public schools and pump money into the food stamp program.
The ballot initiative is currently gathering signatures, but even Gov. Gavin Newsom, a left-leaning Democrat and a prospective 2028 presidential candidate, is wary of it.
“You would have a windfall one time,” he told Bloomberg, “and then over the years you would see a significant reduction in taxes because taxpayers will move.”
• Susan Ferrechio can be reached at sferrechio@washingtontimes.com.
