These 8 States Are Working Together to Tax the Hell Out of the Super-Rich
With a wealth tax stalled at the national level and Republicans in control of the U.S. House, a coalition of progressives at the state level are fighting for tax justice.
Nick Vachon
The super-rich have done phenomenally well over the course of the pandemic. Since March 2020, U.S. billionaires have increased their wealth by 50% and the world’s 10 richest men — led by Tesla founder and Twitter owner Elon Musk—doubled their fortunes in the same period.
Now, a coalition of state lawmakers from California, New York, Washington, Connecticut, Illinois, Maryland, Minnesota and Hawai’i have announced a coordinated effort to increase taxes on their wealthiest residents.
The push is part of a new effort called Fund Our Future and is supported by the State Revenue Alliance — a group that coordinates political campaigns around tax justice — and SiX Action, a wing of the nonprofit State Innovation Exchange, which provides support to state legislators working to pass progressive policies.
On a press call in late January with the state lawmakers behind the bills, Washington State Sen. Noel Frame told reporters “We are here to put billionaires and ultramillionaires on notice that it is time that they pay what they owe, and that state legislators are the ones to make them do it.”
Also on the call was Congressional Progressive Caucus Chair Rep. Pramila Jayapal (D-Wash.), who is co-sponsoring federal wealth tax legislation this session with Sen. Elizabeth Warren, (D-Mass.). “As we well know, Democrats don’t control the U.S. House in this session and so it’s more important than ever that we use our state legislatures to showcase the incredible opportunity to really skew the scales towards working people, not against them,” Jayapal said.
“We’ve seen over and over again how leading cities and states across the country can help make the case for and build the movement for federal policy from a 15-dollar minimum wage, to paid sick days, now to a wealth tax,” she added.
While the proposals all involve taxing the top .01% of earners, the bills vary from state to state. In Washington and California, State Sen. Frame and State Rep. Alex Lee, respectively, have introduced direct taxes on assessed net worth: the Washington bill would levy a 1% yearly tax on individuals with more than $250 million in financial assets, such as stocks, bonds, and futures contracts, while the California bill would levy a 1% tax on residents with more than $50 million in assets and a 1.5% tax on those with more than $1 billion.
In New York, progressive state legislators introduced three pieces of legislation that aim to increase taxes on the wealthy. One, a so-called “mark-to-market” tax, would require that taxpayers who have more than $1 billion in assets pay the equivalent of an income tax on yearly increases in their net worth. Another bill would increase the estate tax, levied on inheritance income, and a third would increase New York’s already-existing capital gains tax on long-term investment income.
Those three states — California, Washington and New York — account for 40% of U.S. billionaire wealth. And while Democrats hold full control of state government in all three states, in New York and California the bills look unlikely to pass because of opposition from Govs. Kathy Hochul and Gavin Newsom, who are both Democrats.
Washington Gov. Jay Inslee, meanwhile, a Democrat who signed a tax on capital gains last year currently being argued in front of the state Supreme Court, said he was open to the proposal in his state.
On the press call, Professor Emmanuel Saez, a French-American economist at the University of California, Berkeley who helped state legislators devise their proposals, noted that “states have historically been the laboratory of new progressive policies, such as progressive income taxes before 1913 when progressive taxation began at the federal level.”
Far from being un-American, Saez said, “the United States is the country that invented steeply progressive taxation in the first half of the 20th century to bring an end to the Gilded Age. It may well be the country that invents effective taxation of billionaires in the 21st century, the remedy we need for our second Gilded Age.”
Over the last 20 years, Saez, along with famed French economist Thomas Piketty, have published numerous pioneering studies and books outlining their findings that, across the Western world, income inequality has increased dramatically since the 1970s. Both advocate a redistributive tax on wealth to help even the playing field.
Those measures are broadly popular — 57% of Americans polled by YouGov last year said that billionaires are taxed too little and 61% said that they would support requiring households earning more than $100 million to pay at least a fifth of their income in taxes. State-level polling commissioned by Fund Our Future and shared with In These Times shows overwhelming support for taxing the ultra-rich: at least 67% of respondents in the five states the group polled said they favored “increasing taxes on the wealthiest individuals in [their] state.”
Today, wealth taxes are uncommon. While in the mid-1980s there were 11 European nations that had a wealth tax — including Germany, France and Spain — only three do now: Norway, Switzerland and Spain. In most cases, according to a paper published last year by Saez and a colleague, these taxes, which had largely been established in the late 19th and early 20th centuries, were inefficient, hard to enforce and frequently circumvented by the wealthy who could travel with ease to avoid such local taxation. The legislation that U.S. progressives have proposed at the federal and state levels are designed with this history in mind, and carry with them strategies designed to mitigate the unique challenges of taxing the ultrawealthy.
The payoff is potentially huge: State Revenue Alliance executive director Kristen Crowell estimated that the state taxes, were they all to pass, would “conservatively” raise at least $50 billion across all eight states.
The legislators have proposed a variety of ways to spend those gains.
Illinois State Rep. Will Guzzardi said that “in Illinois, we’re proposing to deposit that new revenue into a new working families fund, which will specifically be spent on ending homelessness, fully funding public education, and expanding childcare for every family in our state.”
“A world without homelessness is possible. A world with great public schools for every kid no matter their zip code and universal childcare for every family, that world is possible,” he added.
Frame, the Washington state senator, said that his state would use the increased revenues — an estimated $3 billion per year — to fund education, housing, disability services and tax credits for working families.
A ProPublica report based on IRS filings from the richest Americans found that the ultrawealthy regularly paid far less of their income in taxes than average taxpayers did. Several, including Musk, Amazon founder Jeff Bezos, and investor Carl Icahn, had years where they paid no income tax at all. An analysis from the Office of Management and Budget and the Council of Economic Advisers confirmed the substance of ProPublica’s report, finding that the richest 400 American households paid just 8.2% of their income in taxes — less than the lowest income tax bracket.
“SRA and SiX brought together advocates and legislative officials who understood the critical importance of investing in our communities and ensuring that corporations and the ultra-wealthy pay what they owe,” Crowell, the State Revenue Alliance’s executive director, told In These Times. “We connected them with strategic support and best-in-class campaign resources in order to maximize the impact of their work happening on the ground — movement-building work that will continue to build throughout the legislative session and beyond.”
Like many progressive legislative pushes, Jessie Ulibarri, co-executive director of SiX Action and a former Colorado state senator, told In These Times that a strong grassroots campaign is fueling the drive to raise taxes on the super-rich.
“Fund our Future is unique in that we have state legislators from eight states moving these proposals in a coordinated way, and they’re doing that side by side with grassroots partners, with advocates, with people who are directly impacted by the kinds of issues that have required this kind of legislative intervention,” Ulibarri said. “It’s not just the legislators introducing bills — they’re working in coalition.”
“For us, that’s the sweet spot of social change,” he added.
Many of the legislators involved in the campaign come from an organizing background, including Frame and New York State Sen. Gustavo Rivera.
The utility of that background was on display on the afternoon of January 19, when, amid a rainstorm, Rivera and other New York state legislators rallied alongside activists in front of an Upper East Side high-rise home to a number of the city’s billionaires and millionaires. Organized by a group called Invest in Our New York Coalition, the group — including New York City Comptroller Brad Lander and State Sens. Jessica Ramos and Jabari Brisport — called on the state to pass the slate of wealth tax legislation that progressives have introduced as part of the national campaign.
“A little rain is not going to stop us,” Brisport said, “and neither are decades of trickle-down economics.”
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Nick Vachon is a writer based in New York.
