Blue states: Time to tax the rich?

Seattle Mayor Katie Wilson. — Seattle’s Wilson: Alienating billionaires

(Image credit: Getty)

Across the nation, Democrats are waging a “war on wealth,” said the Washington Examiner in an editorial. In March, state lawmakers in Democratic-run Washington slapped a 9.9% levy on incomes over $1 million; Maine Democrats followed suit in April with a 2% surcharge. New York City Mayor Zohran Mamdani is currently seeking a tax on second homes worth $5 million or more. And in November, Californians will vote on a referendum that could gouge billionaires with a one-time 5% levy; Minnesota, Hawaii, and Illinois are considering similar wealth taxes. It’s a short-sighted policy spearheaded by Democrats who wrongly “see billionaires not as engines of economic growth but as villains who should be punished.” And it belies the fact that the very rich “are paying their fair share, and arguably more.” The top 1% of earners take in about 20% of all income—but pay about 40% of federal income taxes.

That’s true of high-salary workers, said Nathaniel Meyersohn in CNN.com. But billionaires’ wealth often comes from the growing value of their stock holdings, and capital gains taxes—paid when stock is sold—are lower than income taxes. From 2014 to 2018, ProPublica found, the nation’s top 25 billionaires’ wealth rose by $401 billion, while their federal income tax rate was a mere 3.4%. But state wealth taxes “may backfire” if wealthy residents flee to lower-tax red states. It’s already happening, said Jonathan Turley in the New York Post. Wealth builders are bolting from Seattle, where they face both tax hikes and “hostility” from socialist mayor Katie Wilson, who casts them as “social parasites.” Seattle-based Starbucks, whose co-founder Howard Schultz blasted Wilson for “socialist rhetoric” that “vilifies employers,” is planning a $100 million headquarters in business-friendly Nashville.

To understand why wealth taxes make sense, look to California, said Emmanuel Saez and Gabriel Zucman in The New York Times. Over the past three years alone, its billionaires’ collective wealth rocketed by 144%, to over $2 trillion. But from 2019 to 2025, they paid, on average, only 0.26% of their wealth annually in state income taxes. Meanwhile, the state faces a budget gap worsened by the Trump administration’s cuts to Medicaid, and cities are cutting services. A one-time 5% tax on the “ultrarich”—who have “benefited from the state’s infrastructure, universities,” and business networks—would raise nearly $100 billion. It’s high time they “contribute in modest proportion to their gains,” and in November, “California’s voters should show the nation the way forward.”

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