Finally, Democrats—of All Stripes—Are Coming After the Wealthy’s Money

The state of Washington is on the verge of enacting a 9.9 percent tax on income over $1 million. Rhode Island’s governor has proposed a 3 percent tax on income above that same level. Lawmakers in New York state are advancing a 0.5 percent tax on income over $5 million. Liberal groups in California and Michigan are pushing for ballot initiatives that would raise taxes on the super-rich in their states. In Washington, D.C., Senators Cory Booker, Ed Markey, Bernie Sanders and Chris Van Hollen have all recently rolled out proposals to drastically increase taxes on the rich across the country.

It’s soak-the-rich time. Presidents Clinton, Obama and Biden all raised taxes on the rich, so this isn’t new for Democrats. But there are three important shifts happening. First of all, Democrats at the state level are aggressively pushing tax hikes, ignoring perennial threats from the wealthy that they will move to other states if their taxes go up. Secondly, Democrats are no longer framing their tax increases on the wealthy solely as measures to fund programs for average Americans. They are leaning into populist rhetoric, arguing America’s super-wealthy simply have too much money and taking some of that away is a public good on its own. Third, the federal proposals are bigger and more comprehensive than before, attempting to tax all the myriad ways the super-rich earn and save money.

This is a great and long overdue direction for the Democratic Party to go in.

“Billionaires are hoarding their wealth to corrupt our politics and entrench their own power,” Indivisible co-executive director Ezra Levin said in a statement endorsing Van Hollen’s proposal. “Those very same billionaires are bankrolling the wannabe king, making a bet that selling out our democracy will be rewarded with personal financial favors.”

Blue states have generally had higher taxes than red ones. But Democratic politicians in those states, particularly governors, have often been wary of raising taxes on the rich. What’s changed? Four things. First, it worked in Massachusetts. In 2022, the Bay State passed a ballot measure that created a 4 percent tax on income over $1 million. Despite their threats before the vote, the wealthy and businesses didn’t leave the state en masse. And the state has used money from the tax on very useful policies, such as making breakfast and lunch free for all students. The Massachusetts success has emboldened Democrats in other states. New York City Mayor Zohran Mamdani has cited the Bay State while pushing the state legislature in New York to raise taxes on the rich.

Second, it helps that numerous blue states are advancing these provisions at the same time. This way, no individual blue state can be cast as uniquely anti-rich or anti-business. It also complicates things for the super-wealthy, many of whom are socially liberal and therefore prefer living in blue states. Moving from California to Washington or vice-versa to avoid taxes can’t be done if both states have taxes on the super-rich. “Red and Blue States Are Growing Further Apart on Income Tax” was the headline of a recent Wall Street Journal article that chronicled Democratic states’ collective move to increase taxes on the wealthy even as red states keep dropping their rates.

Third, while federal income taxes are generally progressive (the rich pay higher rates), that’s often not the case at the state level. Washington, for example, currently has no state income tax. So in many ways, blue states are simply catching up to their federal Democratic counterparts in hiking taxes for the rich.

Fourth, fury with billionaires either acquiescing to President Trump or outright supporting him is driving Democrats at the state level and nationally to support higher taxes on millionaires and billionaires. Sanders has been complaining about the super-wealthy for decades. He, Elizabeth Warren, and the party’s left wing have spent the last several years warning of an oligarchy. But the pro-Trump behavior of Jeff Bezos, Elon Musk, Mark Zuckerberg, and other ultra-rich people is driving even more moderate Democratic voters and politicians to a much greater antipathy to the billionaires. That makes it easier to propose major tax increases on them.

To be sure, not all Democrats are embracing this anti-rich ethos. Governors Gavin Newsom (California) and Kathy Hochul (New York) are opposed to the provisions in their states, making the usual argument that too many rich people will leave. They’re not just fear-mongering. Starbucks founder and longtime Seattle resident Howard Schultz has announced that he is moving to Miami; Google’s founders are leaving California.

But overall, research suggests that states come out ahead financially when they raise taxes on the wealthy. And even with the tax increases on the rich, the U.S. economy did better under Clinton, Obama, and Trump than the GOP presidents who preceded and succeeded them.

“Income tax levels have little impact on where the wealthiest taxpayers choose to live. This makes sense because the rich don’t need to consider cost of living and they typically have business and family ties that keep them in a certain area,” wrote Miles Trinidad and Matthew Gardner of the Institute on Taxation and Economic Policy in a recent paper.

Some states may not end up passing new taxes on the rich. Some provisions may be invalidated by judges. But we are moving toward a country in which all Democratic state legislators, governors, and presidential candidates will be expected to have plans to drastically raise taxes on the wealthy. That’s the right economic policy. But more importantly, it’s the right democracy policy. Real democracy cannot be sustained if a few people have enormous wealth that they turn into excessive political power. Too many billionaires have chosen to align with Trump. They have already lost respect and acclaim—and hopefully that decision will eventually cost them money too.