California said no to a billionaire tax — but 5 other states are targeting their richest residents with new taxes

The real threat, however, to a federal wealth tax is the Constitution itself. The Tax Policy Center noted that “The U.S. Constitution bans the federal government from imposing direct taxes that are not collected evenly across states based on their populations,” meaning a federal wealth tax would likely head for a Supreme Court showdown.

State wealth taxes, however, are another thing entirely — and these states are focused on trying to tax the rich with new legislation.

Five state tax plans targeting the wealthy

Massachusetts

Massachusetts passed a millionaire’s tax in 2022, while fresh majorities in Connecticut’s House and Senate have some Democrats eyeing similar legislation there.

Hawaii

The Aloha State, which already has one of the highest tax burdens in the country, passed an annual 13% personal income tax rate hike for income above $1 million, which leaders believe could yield $53 million in extra revenue. The tax hike takes effect in 2027.

Maine

Maine passed a supplemental budget bill that adds a 2% annual income tax surcharge for those making more than $1 million — which the state says “would raise just under $96 million in state fiscal year 2027 and approximately $74 million in each year of the next biennium.” Like with Hawaii, this tax takes effect next year.

Rhode Island

Rhode Island passed a new millionaire’s tax that levies a 3% income tax surcharge on incomes over $1 million, with annual revenue expected to hit $150 million. The tax, which takes effect in 2027, will be implemented gradually, at 1% a year until it hits 3%.

Washington

Washington state voters gave the go-ahead to a 9.9% tax on income above $1 million that kicks in on Jan. 1, 2028. It’s estimated that the first year of tax collections alone could result in a $3.5-billion windfall.

Under consideration: New York and Illinois

Both New York and Illinois proposed annual billionaire mark-to-market taxes that would tax unrealized gains via the value of investments and assets above $1 billion — even if the asset or stock hasn’t been sold. For example, if a billionaire owns stock that rises in value from $2 billion to $3 billion one year, that $1 billion net gain would be counted as part of the taxpayer’s income and taxed.

In New York, taxation would be subject to a “phase-in cap amount” that is “equal to a quarter of the worth of a taxpayer’s net assets in excess of one billion dollars.”

Both bills, however, remain stuck in their respective state legislatures and it’s unclear if they have the potential to move forward or if the rich in those two states might dodge a similar bullet as California’s billionaires.