Wealth Tax News – 8/21/2026

This week saw continued momentum against state-level wealth taxes, as California billionaires poured nearly $40 million more into the fight against Prop 40 and critics — including Mark Cuban — highlighted the impracticality of taxing illiquid startup wealth, while Washington’s enacted millionaire tax faced a repeal initiative even as revenue projections rose from initial estimates.

Meanwhile, New York’s real estate industry urged a pause on the city’s new pied-à-terre tax amid a chaotic rollout, Rhode Island homeowners filed the first lawsuit challenging the state’s new “Taylor Swift Tax” on second homes, and commentators warned that capital mobility will continue to undermine efforts to tax the wealthy at both the state and national level.

Please find summaries of relevant articles with web links below. Please reach out to any member of your Brownstein National Tax Policy Group team with questions or to set up a meeting.

California Wealth Tax Initiative 2026: Latest Polls – The New York Times
The New York Times has set up a page on their website tracking recent polling on the California wealth tax proposal.

California

Mark Cuban bests Ro Khanna on wealth taxes for startups – The Washington Post Op-ed; California Rep. Ro Khanna debates billionaire tax with Mark Cuban, Bill Ackman – CNBC
The Editorial Board criticized Rep. Ro Khanna’s (D-CA) support (in response to a question posed by Mark Cuban) for California’s proposed billionaire tax (Prop 40) focusing on his suggestion that illiquid start-up founders could take government loans against their company shares to pay the tax. It argues that this approach would expose the state to losses if highly valued start-ups fail, effectively leaving California with stakes in unsuccessful companies. The Board also argued that wealth taxes are difficult to administer because billionaire assets are often illiquid and hard to value, and it cites these challenges as a reason many countries have abandoned such taxes.

California billionaires add millions to bolster fight against wealth tax – Financial Times; Billionaires open the purse to fight California wealth tax – Los Angeles Times
California billionaires and investors have added nearly $40 million to the campaign against Proposition 40. The opposition group, Building a Better California, has a major war chest with large contributions from figures including Chris Larsen, John Doerr, and Sergey Brin, while also funding rival measures intended to block the tax. Most recently, Chris Larsen, executive chair of blockchain company Ripple, donated an additional $10 million to the group and John Doerr contributed $7.5 million. Investor John Hering gave $946,00 and Neil Mehta, Founder of Greenoaks Capital, donated $250,000. Building a Better California has also put down $5 million each into the anti-Prop 40 campaign and two campaigns supporting rival measures.

California billionaire tax debate: Here’s what to know – CNBC
Robert Frank discussed the Mark Cuban and Rep. Khanna debate over the weekend. Frank cited a recent study that notes 2/3rds of taxable billionaire wealth is in public founder equity and only 10% in private companies, financial funds, or another combination. Frank also discussed the counter measures to Prop 40, which are Prop 41 and 42, which would nullify the tax if enacted.

When talking about Props 40, 41, and 42, he notes that if all of them pass, the one with the most votes wins. He notes that Prop 42 essentially prohibits new taxes on retirement accounts and certain personal assets, which he notes Californians would likely vote in favor of.

California’s wealth tax is already failing – Washington Examiner
The Editorial Board argues that Prop 40 would be difficult to administer and economically damaging, particularly for startup founders whose wealth is tied up in illiquid company stock. It highlights Mark Cuban’s criticism of Rep. Khanna’s suggestion that founders could borrow from the state to pay the tax, arguing this could ultimately give government ownership stakes in private firms. The Board further warns that wealthy residents and prospective entrepreneurs may relocate to lower-tax states, reducing long-term income-tax revenue and weakening California’s innovation economy, while questioning whether the tax would remain temporary.

Tom Steyer talks climate, billionaire tax and the progressive wave skipping California – POLITICO
After finishing third in California’s gubernatorial primary, Tom Steyer (D) says he is returning to climate investing and advocacy. Steyer supports the billionaire-tax ballot measure as preferable to inaction but argues it is poorly designed compared with broader reforms such as taxing commercial property at market value.

Military veterans sound alarm over California hospital crisis in new Prop 40 Billionaire Tax ad – Yes on 40; Military Veterans for Prop 40 Ad – Yes on 40
The Yes on 40 campaign released a new ad featuring military veterans and frontline healthcare workers urging Californians to support Prop 40. The campaign committee cited endorsements from Democratic and labor organizations and polling showing majority support in the press release about the ad.

New York

NY’s Real Estate Industry Calls for Second Home Tax Pause – Bloomberg Law
New York City’s real estate industry is urging Mayor Mamdani to pause implementation of the new pied-à-terre tax, citing a rushed, confusing rollout and errors in a public list of potentially affected properties. The Department of Finance sent 17,000 notices to owners who may owe the tax, with appeals due Sept. 18, while at least 4,300 owners have sought exemptions. The tax faces litigation and unresolved administrative questions, including treatment of vacant apartments, trusts, and co-op residents.

Washington

Washington revenue officials: Income tax will bring in more money than first expected – OPB
Washington’s Department of Revenue estimates that the state’s new millionaire tax will generate $3.1 billion in its first fiscal year and about $8.3 billion in the 2029-31 biennium, up from earlier projections of $2.7 billion and $6.9 billion. The revision reflects stronger forecasts for wages, dividends, stock income, and personal income, which are expected to raise the number of affected households from 21,000 to 25,000. The higher estimates could reduce anticipated state budget cuts if voters reject Initiative 645, which would repeal the tax.

Public sector unions pushing millionaire tax in Washington state – The Washington Post Op-ed
The Editorial Board argues that Washington’s millionaire tax would raise Seattle’s top marginal tax rate to nearly 58% when combined with federal and local taxes. It criticized public-sector unions for heavily funding the campaign against a referendum that would repeal the tax, Initiative 645, and argued that they would benefit from increased government spending and union employment. The Board warns that the tax could drive high earners and businesses elsewhere, questioned whether higher taxes improve public services, and argued the measure may conflict with Washington’s constitutional limits on property taxes.

Rhode Island

‘Taylor Swift Tax’ Draws First Suit From Rhode Island Homeowners  – Bloomberg Law
On Wednesday, 40+ Rhode Island property owners filed a lawsuit challenging the state’s new “Taylor Swift Tax.” The tax took effect July 1 and imposes an additional $5 per $1,000 of assessed value above $1 million on second homes. The plaintiffs argue that the tax unfairly targets non-residents, lacks a rational basis for its selective application, and violates federal and state constitutional principles, including “no taxation without representation.” The case, Adams v. Rhode Island, was filed in Newport County Superior Court against the state, its Division of Taxation, and administrator Neena S. Savage.

Other

It’s Hard to Tax Things That Move – WSJ (Opinion)
Wealth and other relevant taxes on high-income individuals are likely to fail because capital has become increasingly mobile across states and countries. Lower communication, transportation, and relocation costs allow businesses, assets, and workers to move more easily to lower-tax, less-regulated jurisdictions.

Why Britain Is Shedding Millionaires – WSJ (Opinion)
The Editorial Board argued that Britain’s high and potentially rising taxes, combined with weak growth and regulations are driving wealthy residents and prospective wealth creators to leave the country. The Board cited declines in the number of British millionaires and outward migration, warning that proposals such as a wealth tax could further shrink the tax base as affluent people relocate to more favorable jurisdictions.