Wealth Tax News – 10/26/2026

California’s Prop 40 billionaire tax remains short of a majority according to a new poll, at 46% support to 43% opposed among likely voters.

New Stanford/Hoover research warns that billionaire departures could leave the state with a net revenue loss, and Meta disclosed that Mark Zuckerberg weighed leaving California over the tax. In Washington, the fight over I-645’s proposed repeal of the millionaires tax centers on the disputed “$13 billion” revenue figure, while Colorado weighs Amendment 87’s graduated income tax and Rep. Laura Friedman’s TAB Act targets “buy, borrow, die” at the federal level.

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.

Polling
Track the Latest Polls in California’s Prop. 40 Wealth Tax Initiative – The New York Times; California billionaire tax falling short of majority support, poll finds – POLITICO
A TrueDot poll sponsored by POLITICO and UC Berkeley found that out of 909 likely voters, 46% said they were in favor of the measure. 43% said they were opposed and 10% said they were unsure.

Federal
Rep. Friedman Introduces Bill to Close Tax-Avoidance Loophole Used by the Ultra-Rich – Representative Laura Friedman
On Thursday, Rep. Laura Friedman (D-CA) introduced the Pay Your Taxes Avoided by Borrowing (TAB) Act.  The bill would impose a 23.8% excise tax, paid by the borrower, on covered loans issued after December 31, 2026. It would apply only to the portion of a borrower’s total covered loans above $1 million, with related parties counted together so the threshold can’t be split. It would also prevent double taxation by giving the borrower an offsetting long-term capital loss, equal to the taxed loan amount, when they later sell the asset that secured the loan. The bill would require lenders to report covered loans above the threshold to the IRS and to borrowers, and directs Treasury to issue anti-avoidance rules. The following would be exempt from the tax: home mortgages, home equity debt up to $3 million, auto loans up to $100,000, student loans, business loans (other than loans used to fund distributions), and qualified margin loans used for securities trading.

California

Zuckerberg considered leaving CA over wealth tax, Meta says – POLITICO
Meta disclosed that CEO Mark Zuckerberg considered leaving California over Prop 40. Meta proposed a new share class allowing him to sell up to half his economic stake without relinquishing voting control, with restrictions easing gradually if he remains a company leader and based nearby.

California’s Wealth Tax Boomerang – WSJ
The Wall Street Journal Editorial Board argues that Prop 40 could reduce state revenue rather than deliver the $100 billion supporters project. It cites a Hoover Institution study estimating a $38.9 billion net revenue loss as wealthy residents relocate, legal challenges potentially narrow the tax’s reach, and lost future income-tax payments outweigh upfront wealth-tax collections. According to the Board, seven billionaires holding $539.9 billion had already left before the measure’s proposed residency cutoff, removing nearly 30% of its estimated tax base.

A California wealth tax wouldn’t work, but this one would – The Washington Post
Dario Marino argues that the Hall–Rabushka flat tax offers a simpler, more growth-oriented alternative to Prop 40. The plan would tax business profits and household wages above an exemption at a uniform 19% rate, allow immediate deductions for business investment, and avoid additional taxes on interest, dividends, and capital gains. Marino said the household exemption would preserve progressivity while encouraging saving and investment, whereas Prop 40 could force asset sales and discourage entrepreneurship and innovation.

California billionaire tax could leave state with less revenue, Stanford study cautions – CBS
A study by Stanford economists Benjamin Jaros and Joshua Rauh warns that Prop 40 could raise about $30 billion, rather than supporters’ projected $100 billion, after billionaire departures substantially reduced the potential tax base. If resulting annual income-tax losses persist permanently, the researchers estimate their present value would exceed wealth-tax proceeds by roughly $39 billion. The measure’s union sponsor disputes the findings, arguing the revenue is needed to preserve healthcare coverage, while supportive economists emphasize the economic benefits of public investment. A recent poll found likely voters narrowly divided, with 46% supporting the measure and 43% opposed.

Billionaire tax backers plan to attack Newsom in early presidential primary states – Los Angeles Times
Backers of Prop 40 are launching a six-figure television and digital ad campaign in early presidential primary states attacking Gov. Gavin Newsom’s (D) opposition to the measure. The ads accuse Gov. Newsom of siding with billionaire donors over working families who could benefit from healthcare funding. Newsom argues that wealth taxes should be enacted nationally to avoid driving wealthy residents out of California.

Washington

Washington State’s ‘Millionaire’ Tax Trick – WSJ
The Wall Street Journal Editorial Board warns that Washington’s millionaire tax could eventually reach lower-income taxpayers. The Board cited Democratic lawmakers’ suggestions of lowering the threshold to $250,000 or $750,000. The Board also criticized the law’s treatment of pension income and biennial inflation adjustments, and argues that the attorney general’s description of a November repeal initiative, which warns of reduced education and human-services funding, is intended to discourage repeal. The tax faces a constitutional challenge, with a hearing scheduled for February.

Seattle’s Children’s CEO: Millionaires Tax will have philanthropic unintended consequences – KOMO News
Seattle Children’s CEO Christopher Longhurst warns that Washington’s millionaires tax could discourage philanthropy through its $100,000 charitable deduction cap per individual or couple and concerns that out-of-state donors’ charitable giving or nonprofit board service could affect residency determinations. The hospital receives nearly $250 million annually in donations, a substantial portion supporting uncompensated care. State Sen. Jamie Pedersen (D) says lawmakers plan to address the residency issue in 2027 and could consider increasing the deduction cap, while disputing that it would significantly deter giving. Gov. Bob Ferguson (D) and Pedersen argue that repealing the tax through Initiative 645 would jeopardize funding for healthcare and other family benefits.

Caregivers urge vote no on I-645 in Washington – Tri-City Herald
In a Tri-City Herald guest opinion, in-home caregiver Ana Claudia Rodriguez Mendoza urges voters to reject Initiative 645, arguing that repealing the millionaire tax would create a $13 billion budget shortfall and jeopardize healthcare, education, child care, and other services. She argues that repeal would also reverse small-business and household tax relief, narrow eligibility for the Working Families Tax Credit, and eliminate free school meals for some students, compounding pressures from federal Medicaid cuts. She also argued that preserving a tax paid by fewer than 1% of state taxpayers would protect essential support for caregivers, their clients, and working families.

Is I-645 a ‘$13 billion tax break’ for millionaires and billionaires? – The Seattle Times
The Seattle Times reports that opponents’ claim that Initiative 645 would give wealthy Washington residents a “$13 billion tax break” reflects projected revenue over four years, not annually, from the state’s millionaire tax. State estimates project $12.9 billion in collections for 2029–2032, while a separate $11.4 billion repeal estimate covers a different fiscal period. The initiative would repeal the income tax while preserving accompanying tax breaks for businesses and households. Repeal supporters question the revenue projections and whether eliminating a tax before collections begin constitutes a tax break. Alternatively, the article notes, repeal would eliminate a tax already enacted into law.

In Vancouver, Gov. Ferguson campaigns against initiative to repeal Washington’s ‘millionaire’s tax’ – KGW
Gov. Ferguson campaigned in Vancouver against Initiative 645, arguing that repealing the millionaire tax would forgo billions in future revenue supporting school meals, family tax credits, essential-item sales tax exemptions, and small-business tax relief.

Study shows job losses, slower economy unless income tax is repealed – Yahoo Finance
A Washington Policy Center–Buckeye Institute report, highlighted by the National Federation of Independent Business (NFIB), projects that retaining Washington’s millionaire tax would reduce employment, economic output, consumer spending, and business investment. The estimates include nearly 8,000 fewer jobs, almost $5 billion less economic output, and $3.1 billion less business investment in 2028. NFIB cites the findings in support of Initiative 645, which would repeal the tax, arguing that it would hinder small-business expansion and competitiveness.

Colorado

Will the wealthy flee Colorado if a graduated income tax is passed? – The Colorado Sun
Massachusetts’ experience with a millionaire tax challenges predictions of widespread wealthy-resident departures if Colorado adopts Amendment 87, which would replace its 4.4% flat income tax with six brackets ranging from 3.7% to 8.4% for individuals and businesses. The proposal would lower taxes for roughly 97% of taxpayers and raise an estimated $2 billion initially for education, healthcare, and child care. Massachusetts’ millionaire surtax has exceeded revenue projections without the predicted mass exodus, although its broader economic effects remain uncertain. Colorado opponents, including Gov. Jared Polis (D) and major business groups, warn of reduced competitiveness and investment, while supporters argue the measure would fund essential services and distribute taxes more fairly.

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.