Wealth Tax News – 6/7/2026

This week’s wealth-tax debate spanned from federal proposals to tax AI-driven wealth and close billionaire borrowing loopholes to broader calls for public ownership or stronger taxation of extreme wealth. California remained the focal point, as its proposed one-time billionaire tax drew support from a majority of voters while also fueling legal challenges, relocation stories, and warnings about competitiveness and litigation.

Elsewhere, policymakers continued pushing high-earner taxes through measures like New York City’s pied-à-terre tax, Rhode Island’s phased-in millionaire’s tax, Washington’s new income tax on households above $1 million, and similar “tax the rich” debates in Massachusetts and abroad.

Please find summaries of relevant articles with web links below. Please reach out to any member of your Brownstein National Tax Policy Group team with questions or to set up a meeting.

Federal

Why We Need to Tax AI – Time Magazine; Sen. Elizabeth Warren on calls for AI tax, details of her two-cent wealth tax proposal – CNBC
Sen. Elizabeth Warren (D-MA), argues that artificial intelligence (AI) is expected to exacerbate economic inequality by concentrating wealth among tech companies. She also highlighted that it would displace workers and raise costs, including energy prices tied to data centers. She calls for taxing AI as part of a broader overhaul of the tax code, including higher corporate and capital gains taxes, a wealth tax, and closing loopholes that favor automation over hiring. Sen. Warren also proposed targeted measures such as an excise tax on AI data centers’ energy use, with revenue used to fund priorities like universal healthcare, education and jobs.

On CNBC, Sen. Warren said argues that emerging AI technologies and extreme wealth concentration justify new forms of taxation, including targeted levies on AI and a broad-based federal wealth tax. She proposes an excise tax on AI data centers so firms “internalize” the social and labor-market costs of automation and to fund health care, child care, and education. She also reiterates her call for a wealth tax, framing it as a simple way to bypass loophole-ridden income and capital-gains rules and ensure billionaires contribute based on their accumulated wealth rather than just realized income.

Sen. Tim Scott: A wealth tax is a terrible idea – CNBC
Senate Banking Committee Chairman Tim Scott (R-SC) argues against taxing unrealized gains and wealth taxes, calling them impractical and punitive, especially for asset‑rich, cash‑poor taxpayers like farmers. He said that lower capital gains rates historically increased federal revenue by encouraging realizations and reinvestment, while higher rates suppressed realizations and reduced receipts, so tax policy should focus on pro‑growth incentives rather than new taxes on wealth. Chairman Scott emphasized that the top share of earners already pay most federal taxes, the bottom half pay little or no net income tax, and the core problem is federal overspending, which he believes should be addressed through spending restraint, a balanced budget requirement, and bipartisan process reforms rather than wealth‑based taxes.

Opinion | Bernie Sanders: A.I. Belongs to the People, Not to Billionaires – The New York Times
Sen. Bernie Sanders (I-VT) argued that AI will be a transformative force with major economic and social consequences. He raised concerns about concentrated control among certain individuals and the use of publicly derived data without compensation. He claimed that because AI is built on collective human knowledge, its benefits should be broadly shared. He proposed creating an American AI sovereign wealth fund through a 50% one-time tax paid in company stock. The fund would give the public an ownership stake and governance role in major AI firms while generating revenue to support direct payments and public investments. He said that AI-driven wealth should benefit all Americans rather than a small group of private actors.

Gallego Introduces Legislation to Crack Down on Billionaire Tax Loophole
On June 2, Sen. Ruben Gallego introduced the ROBINHOOD Act. The bill treats loans taken out by high net-worth taxpayers as “realization events” of unrealized long-term capital gains, triggering long-term capital gains equal to the amount of borrowing. This capital gain is thus subject to normal taxes, currently totaling 23.8% for these taxpayers. After paying, the taxpayer would then be able to increase the basis of assets in their portfolio up to the value of the loan to avoid double taxation if the assets are later sold. The provisions of the bill apply to taxpayers who have an income over $100 million and/or assets worth more than $1 billion.

California

2026 California Billionaire Tax Act: Details & Analysis – The Tax Foundation
California’s proposed wealth tax has constitutional vulnerabilities that create strong incentives for billionaires to leave the state during 2026. This article explains that tying liability to a “snapshot” residency date (January 1) and a later valuation date (December 31), without apportionment for part‑year residency and even taxing post‑departure wealth, may violate due process. Because courts may strike down or rewrite these provisions—especially the retroactive imposition of a wholly new wealth tax and the attempt to tax wealth earned after a taxpayer leaves—the Tax Foundation concludes that mid‑2026 movers have credible legal arguments to reduce or avoid the tax, and that the measure’s design is likely to fuel ongoing billionaire out‑migration even before any court rulings.

California’s Tax-Weary Billionaires Seek Refuge on Lake Tahoe’s Nevada Shore – WSJ
California’s proposed wealth tax is accelerating a shift of ultra-wealthy residents to the Nevada side of Lake Tahoe, where there is no state income, capital gains, or corporate tax. This tax-driven migration has fueled a surge in demand and record-breaking home sales in Nevada communities like Incline Village and Crystal Bay, with buyers paying premiums to reduce tax exposure.

Opinion: California’s proposed ‘billionaire tax’ is moronic. We should do this instead. – MarketWatch
Brett Arends argues that California’s proposed wealth tax is poorly designed, likely to trigger avoidance and outmigration, and ineffective as a revenue solution, ultimately undermining the broader case for wealth taxation. Arends notes that while wealth inequality has grown significantly and justifies policy action, a better approach would be a modest, recurring national wealth tax (e.g., 1% annually) that is harder to evade, more stable for revenue, and less economically disruptive.

Proposed ‘billionaire tax’ in California spurs controversy and heavy spending – ABC News
California’s proposed wealth tax has become a polarizing ballot fight that is dividing Democrats and fueling massive, competing campaigns. Supporters argue the measure could raise about $100 billion over five years, with roughly 90% dedicated to shoring up the healthcare system and preventing a “complete collapse.” Opponents including Gov. Gavin Newsom (D) and the “Building a Better California” group warn it could spur billionaire flight, damage the state’s economic base, and be effectively nullified by rival ballot measures.

Billionaire ‘Class Traitor’ Steyer Wants to Tax His Fellow Rich – Bloomberg Law
Tom Steyer has spent over $200 million of his own money into the race and calls for capping oil refinery profits, breaking up utility monopolies, and taxing the ultra‑rich, enraging business groups and prompting heavy attack ads. While critics question his authenticity and classify his campaign as performative or narcissistic, supporters argue he is using his wealth to challenge his own class.

Proposed billionaire tax backed by majority of California voters – New York Post
A recent Public Policy Institute of California poll finds that 54% of likely voters support the California’s proposed wealth tax even as business groups, Gov. Gavin Newsom, and several studies warn it could trigger billionaire flight, major job and wage losses, and long‑term economic damage. Support is strongest among Democrats, lower‑income voters, renters, and residents in urban areas like Los Angeles. Republicans, wealthier voters, and homeowners are far more skeptical, and Central Valley voters lean against the measure.

The risks California wealth tax advocates are ignoring – Press Telegram
Daniel Bunn, CEO of the Tax Foundation, said that California’s proposed wealth tax is far riskier than advertised. He warned that it would be difficult to administer, likely unconstitutional in parts, and highly distortive in practice. Bunn highlights drafting flaws that could push effective tax rates on some founder stakes well above 100% of their value, create severe problems for privately held businesses, and accelerate the exodus of high-earning individuals and firms on which the state’s revenue and philanthropic base depend. Comparing it to the European wealth-tax experience and California’s already surging health and human services spending, Bunn said the measure would invite extensive litigation, undermine competitiveness, and fail to address the state’s structural budget issues.

Op-ed: The Case for California’s Wealth Tax – New York Times
Emmanuel Saez and Gabriel Zucman argue that California’s proposed billionaire tax is a modest but important response to rising uninsured-coverage risks and extreme wealth concentration. They write that roughly 250 billionaire households now hold wealth equal to more than half of California’s annual economic output, while paying only a tiny fraction of that wealth each year in California income tax — about 0.26% on average from 2019 to 2025, and about 0.07% for the very richest. They present the measure as narrowly targeted, designed with protections for illiquid start-up holdings and a 5% fair-market-value cap on shares, and capable of raising about $100 billion over five years.

Texas dethrones California as top state for Fortune 500 headquarters – Fox Business
Texas has overtaken California as the state with the most Fortune 500 headquarters, now hosting 57 companies versus California’s 56. Texas-based firms have generated about $2.8 trillion in revenue compared with $2.7 trillion for California-based firms. It links this shift to recent relocations by major corporations like ExxonMobil, Chevron, Samsung Electronics America, SpaceX and X, many moving from California to Texas, alongside billionaires and tech figures establishing residency in the state. Supporters of Texas’s rise point to its business‑friendly regulatory environment, lower costs and population inflows, while noting that California’s proposed wealth tax and broader tax policies are fueling concerns about job losses, and competitiveness.

Massachusetts

Boston Seizes on California Billionaire Tax to Lure AI Jobs – Bloomberg
Massachusetts business and political leaders see California’s proposed wealth tax as a strategic opening to attract artificial intelligence investment and jobs to Boston. They argue that because so much AI talent already passes through local institutions like Harvard and MIT before decamping to Silicon Valley, California’s new tax uncertainty could help Massachusetts convert its academic and biotech strengths into a larger share of the AI-driven economic boom. It would do so by positioning Boston as a more welcoming base for founders and high-growth companies.

New York City

New York passes Mamdani’s pied-a-terre tax. Who pays and how much – CNBC
New York state has approved a pied-à-terre tax on nonprimary residences in New York City valued at $1 million or more. It is aimed at helping close the city’s budget gap by raising an estimated $500 million a year. In the first two years (2026‑27 and 2027‑28), condos and co‑ops valued by the city above $1 million will face steep add‑on rates of 4% to 6.5% based on assessed value, though those assessments are currently far below market. Beginning in 2028‑29, valuations will be reset based on comparable sales and tax rates will drop to about 0.8%–1.3% for properties above $5 million, still significantly increasing many property tax bills.

Rhode Island

Revised FY27 budget takes up ‘compromise’ millionaire’s tax, frustrating businesses and progressives – Rhode Island Current
Last week, Democratic members in the Rhode Island legislature included a phased-in “millionaires tax” into their FY 2027 budget bill. The proposal would impose a 3% surtax on incomes over $1 million that would start at 1% in 2027 and rise to 3% by 2029. Over time, it would ultimately increase the top state income tax rate to 8.99%. The plan follows similar high-earner surtaxes in states like Massachusetts and Maine. The bill is scheduled for consideration in the full House on Friday.

Washington

Millionaires tax will likely appear on November ballot – FOX 13 Seattle
Washington’s new “millionaires tax,” is now the target of a repeal initiative that is likely to appear on the November ballot. Organizers from the group Let’s Go Washington say they have already gathered nearly 100,000 signatures in about a week and are confident they will surpass the roughly 324,000 needed by July 2. Governor Bob Ferguson (D) has publicly welcomed a voter decision and argued that the revenue will fund low‑income family tax credits, schools, and child care. He has pledged not to lower the threshold below $1 million, but the initiative’s leader Brian Heywood, accuses Ferguson and state leaders of lacking credibility on income taxes, saying many signers do not believe those assurances.

Ferguson vows to veto any expansion of WA ‘millionaires tax’ –  Union-Bulletin
Gov. Bob Ferguson (D) has pledged to veto any future attempt to lower the income threshold or raise the rate, emphasizing the tax is meant only for top earners and will fund schools, healthcare, and other services. He and other Democrats see the reassurance as necessary to calm nonmillionaire voters wary the tax could eventually broaden, while opponents like  Brian Heywood and Republican lawmakers dismiss his promise as not credible, noting Washington’s long history of rejecting income taxes and citing strong early signature-gathering as evidence of broad public resistance.

Other

High-Tax States and Competitiveness – The Tax Foundation
Efforts by high‑tax states to close structural budget gaps by raising taxes on high earners and adopting wealth or “billionaire” taxes are fiscally counterproductive and likely to backfire. It details how jurisdictions like California, Hawaii, Illinois, Maine, Minnesota, Rhode Island, Virginia, and Washington are imposing new surtaxes on top incomes or proposing net‑worth taxes, warning that these moves increase volatility, complicate administration and encourage wealthy, mobile taxpayers and capital to relocate to lower‑tax states. The Tax Foundation argues that because these measures target a narrow, highly mobile tax base and address structural deficits with unsustainable solutions, they risk eroding long‑term revenues and competitiveness. The Tax Foundation suggests spending restraint and broad‑based, neutral tax reforms rather than wealth‑focused taxes.

States Taxing the Wealthy Are Mostly Targeting Income: Explained – Bloomberg Law
California’s proposed wealth tax has become an example of state-level efforts to “tax the rich,” prompting both high‑profile exits and intense debate over its design and effects. It situates California in a broader landscape where many blue states are adopting or considering higher taxes on high earners with Washington, Maine, and others adding millionaire brackets. Voters in states like Colorado and Oregon are weighing progressive income or wealth‑style measures.

Wealth tax or stealth tax? – The Washington Times
Chuck Flint, CEO of the Alliance for IRS Accountability, criticizes Sen. Warren’s proposed “Ultra Millionaire Tax of 2026,” arguing that taxing unrealized gains would require a massively expanded, $100 billion IRS enforcement apparatus that ultimately burdens middle‑class taxpayers and small business owners rather than just the ultrawealthy. Flint argues that annual mark‑to‑market valuation of assets like private businesses, farms, and volatile holdings (e.g., crypto) would force people to pay tax on paper gains they cannot readily access. Citing past audit patterns and the experience with boosted IRS funding under the Inflation Reduction Act, he warns that enforcement would drift toward less wealthy filers.

Starmer Leadership Strife Reignites UK Wealth Tax Debate – Bloomberg Law
Cahos in Prime Minister Keir Starmer’s leadership has reopened the UK debate over taxing wealth, with figures on the Labor Party’s left pushing various wealth-focused measures. Andy Burnham argues the UK “overtaxed labor and undertaxed wealth” and backs higher land and property‑style taxes. Wes Streeting calls for a “wealth tax that works” by aligning capital gains tax rates with income tax, a move supporters say could raise up to about £10–12 billion but an analysis suggests could actually reduce revenue if investors delay realizing gains.

Family Enterprise USA Action engages with legislators on Capitol Hill on behalf of family offices, hardworking families, and family-owned businesses. It is focused exclusively on the critical tax and economic policies that impact them. Since 1995, FEUSA Action has been the leading advocacy group working daily in Washington, D.C., to reduce and eliminate estate tax, gift tax, and generation skipping transfer tax while blocking increased income and capital gains taxes, the creation of a wealth tax, and other hostile policies that punish hardworking taxpayers and success in the U.S. It is a bipartisan 501.c4 organization.