State Wealth Taxes and Their Implications
Legislators in seven states have proposed higher taxes on the wealthy for 2023. Lawmakers in New York, Maryland, and Hawaii propose to strengthen estate taxes. In Connecticut, New York, Maryland, and Hawaii, there are proposals to tax realized capital gains. Still other proposals in California, Illinois, New York, and Washington would tax unrealized capital gains. The proposed wealth tax in California would target worldwide net worth in excess of $1 billion, and it would apply even to residents who move to other states. Will these taxes narrow income equality, as their sponsors assert? Will they discourage entrepreneurialism and investment? Are they constitutional?