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Wealth Taxes Proposed in 7 States

National

Wealth tax | Image by Michael Leslie

In what some observers and the media are calling a “coordinated effort,” lawmakers in seven different states that collectively represent about 60% of the nation’s wealth have introduced so-called “wealth taxes” in their state legislatures.

Legislators in Democrat-controlled California, Connecticut, Hawaii, Illinois, Maryland, New York, and Washington are spearheading the effort.

These new tax proposals range from large hikes on investment income and death taxes to more radical proposals that would upend the traditional tax-collecting structure in the United States.

For instance, in some of these states, novel forms of taxation have been introduced that would require so-called “wealthy” individuals to pay taxes on their owned assets rather than their income.

“The point here is to make sure we do at the state level what is not being done at the federal level,” said State Sen. Gustavo Rivera (D-NY).

State Sen. Noel Frame (D-WA) argued to the Washington Post that “states are the labs of innovation, but taxes are different.”

“This is why we are all here together,” she continued. Her hope is that states will no longer “get pitted against each other.”

Proponents of these new wealth taxes are attempting to address the issue of “outmigration,” or people moving, by passing similar legislative packages.

Further, some of the proposals even include “exit taxes,” which are designed to tax individuals even after they have moved out of the state.

An exit tax proposal in California would subject an individual who moves out of the state to wealth taxes for several years.

The Tax Foundation, a non-profit organization focused on tax policy research, asserts that exit taxes are extremely likely to run afoul of the Commerce Clause of the U.S. Constitution and various clauses of state constitutions, but notes “not that constitutions will always stand in the way” of these lawmakers’ ambitions.

According to the Tax Foundation, in 2021, Americans overwhelmingly chose to move from so-called “high-tax” states to “low-tax” states.

The Tax Foundation studied commercial data from U-Haul and United Van Lines, the nation’s top two moving and relocation companies, and found that people, and their wealth, flowed from high-tax states like California, New York, and New Jersey to low-tax states like Florida and Texas.

Calling these proposals “economically destructive,” the Tax Foundation predicts severe consequences if enacted, despite provisions such as exit taxes.

“In fact, the economic consequences — both from outmigration and lower economic activity — are so significant that even at the national level, most countries have abandoned any wealth taxes they once had,” the Tax Foundation claimed.

But these lawmakers are undeterred. State Delegate Jheanelle K. Wilkins (D-MD) said she hopes that the effects of the pandemic will help these ideas gain momentum.

“That’s quite a bit of funds that we’re leaving on the table,” she remarked.

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Zulia
Zulia
8 days ago

How about banning government officials to use market info for their personal gain?

rudy
rudy
8 days ago

Where else are they getting the money for reparations? Despite WE THE PEOPLE paying a huge bailout from our legislature to CA., and NY, they are still broke. Yet they have to make things right…..has anyone seen the elaborate study on reparations done by San Fran? Maybe FL. and TX. needs to build a wall, or how about a moving in tax?

Thomas
Thomas
Reply to  rudy
7 days ago

Maybe California will build a second Iron Curtain, to do the same thing the first one did, i.e. keep people from escaping to freedom.

rob
rob
8 days ago

How about politicians wealth being the first taxed. No immunity.

Thomas
Thomas
7 days ago

I think states doing what each thinks is right is a GREAT idea. States should be able to enact wealth taxes and states with a border with Mexico should be able to build a wall. This might be just what we need to finally split the country in two, a Blue USA and a Red USA. Secession appears to be the only answer, so let people choose which USA they want to live in.

BUT if we do split, NO MORE WELFARE will be sent to Blue USA from Red USA. You made your bed. Now you get to lie in it.

Psoma Chinn
Psoma Chinn
Reply to  Thomas
7 days ago

So I have to ask Mr Red State. Will your Red America have welfare for it’s citizens or would you rather the poor just die of starvation & exposure to the elements? I am a New Yorker making low 6 figures & 35% of my income goes to taxes that help keep programs like food stamps & cash assistance for homeless viable. I have’nt always been this stellar businessman I was a homeless addict at one point & those programs & government assisted plans was the only thing feeding me so I understand the need for these plans & programs. You’ll be upset if you cancel these plans & programs in your state! The junkie’s will team up and crime will surge to all time highs. So I’ll be staying in Blue America… Good luck to you & God bless both sides of America!

Marsha
Marsha
7 days ago

Define wealthy.

Bill
Bill
7 days ago

Completely unconstitutional and it will not withstand a court challenge. There are only three types of taxes that are permissible under the Constitution and without a constitutional amendment that adds a fourth type of tax then this will not stand up to a court challenge.

Bill
Bill
7 days ago

An exit tax would be unconstitutional. I hope these states pass these wealth taxes as states like Texas and Florida will flourish eve more.