Thursday, January 26, 2023
Lawmakers from California, Connecticut, Hawaii, Illinois, Maryland, New York and Washington are coordinating efforts to introduce wealth tax legislation. This campaign is part of a broader national focus on taxing investments, entrepreneurship, and wealth.
The proposed legislation in New York would yield a nearly 30 percent tax on New York City’s wealthiest residents’ capital gains income. This would be about 50 percent higher than the 20 percent federal tax on long-term capital gains.
Concerns have been raised in Washington, where a wealth tax is in conflict with the state constitution. However, this has not caused conflict for prior proposals and is not anticipated to cause issue with this current proposal.
Opponents to this legislation point out the difficulty in accurately measuring wealth, which creates perverse incentives and costly avoidance strategies. While some may say the wealthy can afford these taxes, opponents argue they cut deeply into investment returns which is a detriment to the economy, in addition to slowing innovation.
For more information see Jared Walczak “Wealth Tax Proposals Are Back as States Take Aim at Investment”, Tax Foundation, January 17, 2023.
Special thanks to Glen A. Yale (Yale Law Firm) for bringing this article to my attention.