What is your Top Concern: Income Tax, Estate Tax, or Wealth Tax?
This week, we continue to monitor proposals for new taxes on high earners or the wealthy in Washington, California, Rhode Island, New York, and New Jersey. Washington’s 9.9% millionaire income tax advanced in the legislature and is expected to be signed by the governor. At the federal level, Sen. Cory Booker has introduced the Keep Your Pay Act, which would dramatically increase the standard deduction and expand key tax credits, funded by corporate tax increases and limits on stock buybacks and executive compensation.
Please find summaries of relevant articles with web links below. Full articles are attached. Please reach out to any member of your Brownstein National Tax Policy Group team with questions or to set up a meeting.
Federal
BOOKER ANNOUNCES Keep Your Pay Act – Office of Sen. Cory Booker (D-NJ)
On March 9, Sen. Cory Booker (D-NJ) introduced the Keep Your Pay Act, which would increase the standard deduction to $75,000 for joint filers (with proportional increases for other filing statuses). The bill also would significantly expand and fully refund the Child Tax Credit with a new baby bonus and broaden and triple the Earned Income Tax Credit for workers without children at home. The proposal would be paid for by increasing corporate tax rates, limiting stock buybacks and executive compensation, and other revenue-raising provisions.
California
Study: Billionaire tax would cost California $25 billion in revenue – reason
A recent study conducted by the Stanford Hoover Institution finds that California’s proposal to implement a one-time 5% billionaire wealth tax would likely incur costs of $25 billion for the state despite previous findings that it would generate over $100 billion in revenue. Researchers say this is due to anticipated billionaire migration and the resulting decrease in taxable income.
Wealth tax leads in California poll — but faces major headwinds – POLITICO
An early UC Berkeley-POLITICO poll reveals that half of voters would be likely to support the billionaire wealth tax proposal in California. However, the survey indicates that voters are easily swayed, and it is important to consider potential billionaire migration. Additionally, the survey report indicates that 70% of voters in support of the income tax proposal are Democrats.
Washington
Washington state lawmakers pass ‘millionaire’s tax’ – POLITICO
This week, Washington state lawmakers passed a 9.9% “millionaire’s tax” on annual incomes over $1 million and is expected to be signed by Gov. Bob Ferguson to fund education, prisons, and tax relief. The measure faced Republican opposition warning of business exodus, alongside anticipated legal challenges over the state constitution’s uniformity clause for property taxes and a potential November ballot repeal effort.
Millionaire Tax Advances in Washington State as Legal Duel Looms – Bloomberg
Washington state’s Democratic-controlled House has passed a 9.9% tax on household incomes over $1 million, set to raise nearly $4 billion annually starting in 2029. The legal dispute centers on overturning a 1933 Supreme Court ruling that said graduated income taxes are unconstitutional under the state constitution’s uniformity clause for property taxes, defining “property” broadly to include income. Opponents like former WA Attorney General Rob McKenna argues it requires a constitutional amendment rather than judicial reinterpretation.
Governor Ferguson statement on revised Millionaires’ Tax proposal – Governor Bob Ferguson
Governor Ferguson highlighted that changes to the millionaire tax proposal accounted for increased affordability and legislative changes that would benefits families in the Washington state. The revised bill includes expanded tax credits and free school meals as part of the benefits of this income tax proposal. Governor Ferguson confirmed that he will sign the revised version of this bill.
New York City
Legislature wants higher tax on wealthy, big business – NY1
Despite resistance from Governor Kathy Hochul (D-NY), democratic majority state chambers in New York agree, in part, with Mayor Zohran Mamdani (D-NY) to increase taxes on the wealthy and large corporations in New York City. This could include increasing state income taxes on New Yorkers making over $5 million annually.
New Jersey
NJ, other states reviving push to tax the rich – WHYY
Advocates are pushing states like New Jersey, building on successes in Massachusetts, California, Maryland, and Minnesota, to adopt higher taxes on millionaires, and recent trends show a significant increase in democratic states pushing for a tax on high earners.
Rhode Island
How to win voters and influence revenue: McKee, Foulkes embrace millionaire’s tax in different ways – Rhode Island Current
Gov. Dan McKee (D-RI) said a 3% surtax on income over $1 million is a key part of his FY2027 budget proposal. Support for a wealth tax signals a strong ideological shift in the Democratic Party of the Rhode Island. However, it is also important to note that independent voters, the largest voting bloc in Rhode Island, remain split on the issue of a wealth tax.
Other
Many Americans already pay European tax rates – The Washington Post Opinion
The editorial argues that top earners in places like New York City and California already face combined federal, state, and local income tax rates comparable to or higher than those in major European countries, challenging claims that wealthy Americans pay too little in taxes. It also notes that higher top marginal rates would mostly affect small business owners rather than billionaires, whose wealth largely comes from investment income taxed differently.
The Myth of the Billionaire Wealth Tax – The Washington Post Opinion
The author argues that wealth taxes on billionaires are unlikely to work as advertised because paper wealth (like stock holdings) cannot simply be converted into real goods and services like health care and education, and because such taxes have historically failed in other countries due to capital flight, evasion, and low revenue. The author contends that if Americans want European-style public services, they need broad-based taxes—like the value-added taxes used in Scandinavian countries—that reduce private consumption to fund public spending, rather than relying on politically convenient but economically dubious proposals to tax only billionaires.
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