Progressive states revive push to tax the rich as wealth disparity deepens across the US

PROVIDENCE, R.I. (AP) — Chuck Collins figures he won life’s lottery by inheriting vast sums of money through his great-grandfather Oscar Mayer’s processed meat company, but rather than fight to protect every dime Collins has helped push to hike taxes on the ultrarich like himself.

He was successful in helping implement a higher tax in Massachusetts on income over $1 million, and the idea has already taken hold in a handful of other blue states, including California, Maryland, Minnesota and New Jersey. Lawmakers in the state of Washington, which doesn’t have an income tax, could send the governor this week a measure that would impose one on million-dollar earners.

“I think people are waking up to the harms of these inequalities,” said Collins, a founding member of the group Patriotic Millionaires, which calls for higher taxes on the country’s super affluent. “Including people who have wealth, who say, if we keep going down this road, it ain’t going to end well for anybody.”

Washington could be next to tax millionaire income

Since a state Supreme Court decision nearly a century ago shot down an income tax, Washington has stood out as being one of few states controlled by Democrats without a tax on wages or salaries — though it does tax certain investment proceeds.

Facing a budget shortage, lawmakers are debating a proposal that would create a nearly 10% annual tax on personal earnings over $1 million. If adopted, the tax would collect billions of dollars of new revenue that would be designed to pay for free K-12 school meals, childcare services, a family tax credit and eliminate sales taxes on personal care items such as shampoo.

The state House adopted it this week after an all-night session deliberating amendments to the proposal. Now, it goes back to the Senate, which passed a version previously. Democratic Gov. Bob Ferguson has indicated support if the Legislature, which is controlled by his party, can send it to him before it adjourns Thursday.

“Washington is a state that has had an extremely regressive tax structure for 93 years,” House Majority Leader Joe Fitzgibbon, a Democrat, said in an interview. “It falls very heavily on working and middle class people in our state.” He said that if the change is adopted, it will help. “We don’t need to be a tax haven,” he said.

Others, including GOP lawmakers, caution that taxes on the wealthy are not a comprehensive solution to addressing worrisome state revenues and can drive away businesses.

Colin Hathaway, a millionaire businessman in Washington, said he’s concerned the proposed tax would treat the money earned by his roofing company as income, even though he’s putting most of it back into the business. He was already hit by the state’s previous move to hike capital gains taxes, and said an additional tax could force him to move way from the state where his high school-aged children grew up.

“There’s a strong incentive to not be doing business here,” he said.

If the measure is adopted, it’s likely to be challenged in court and with a ballot measure.

Momentum in blue states

With affordability a hot topic in statehouses this session, a handful of progressive states are at least considering some kind of wealth tax.

Perhaps the most ambitious tax-the-rich effort is taking place in California – a state that already taxes its millionaire class. Advocates are working on a ballot measure that would place a one-time 5% tax on the assets of those with a $1 billion net worth. The proposal, backed by a large health care union, would use the extra revenue to backfill federal funding cuts to health services for lower-income people that were signed by President Donald Trump last year.

For critics, the wealth tax effort in California is the latest example of how the push to tax the rich in the U.S. is no longer about finding solutions to raise revenue but instead now backed by those who believe excessive wealth should be reduced or even erased, said Jared Walczak, a senior fellow at the Tax Foundation.

“You see that in the language around something like the California wealth tax, where the ballot language itself talks about it being a tax on sustaining excessive accumulations of wealth,” Walczak said.

Elsewhere, Rhode Island legislators are debating a budget proposal – backed by Democratic Gov. Dan McKee – that would enact higher taxes on residents earning $1 million or more.

In Michigan, organizers are working to collect enough signatures to get a ballot initiative in front of voters in November asking them to approve replacing the state’s current flat tax. Under the proposal, Michigan would place an additional 5% tax on those who make over $500,000 individually or $1 million for joint filers. The initiative, which is backed by the state’s board of education, would direct the new revenue to help fund K-12 schools.

And New York City Mayor Zohran Mamdani has reupped his push for New York state to raise taxes on the rich — though he faces opposition from Democratic Gov. Kathy Hochul. A similar call has been made by Chicago Mayor Brandon Johnson, but the Illinois Statehouse so far has not moved on imposing a millionaire tax.

Red states move in opposite direction

The recent push by left-leaning leaders in blue states contrasts with what’s being done in many Republican-led states, which have been more critical of passing higher taxes on their richest residents and have moved to abolish or significantly reduce personal income taxes.

Eight states have no income tax at all, and Walczak said the gap between states seeking tax relief and those seeking higher taxes on the wealthy “is larger than it has been for decades.”

Still, questions remain about whether such cuts result in spiking other taxes or eliminating funding for services.

“I think most Americans are pretty fed up because I think they understand that there’s really two tax systems. There’s one for your average person. You’re a nurse? You’re firefighter? Every two weeks you pay taxes. And then for the super wealthy, there’s all these tax breaks and all these special loopholes,” said David Kass, executive director of the left-leaning advocacy group Americans for Tax Fairness.

Massachusetts is often brought up in the debate over the effectiveness of millionaire taxes. Voters passed the Fair Share Amendment in 2022, which added a 4% surtax on income over $1 million; the threshold has risen annually for inflation. To date, the amendment has collected $6 billion for education and transportation, according to the state’s Executive Office for Administration and Finance.

“It’s good for everybody, in a time of grotesque inequality, for wealthy people to chip in a little bit more,” said Collins, Oscar Mayer’s great-grandson. “Especially at a time when others are just struggling to keep up.”

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Attansio reported from Seattle and Mulvihill from Haddonfield, New Jersey.