Wealth Tax News – 5/8/2026

This week’s wealth tax developments ranged from a new federal proposal to tax large trust holdings to intensifying state and local debates in California, Illinois, Washington, and New York over billionaire taxes, millionaire-income taxes, and second-home levies. Across jurisdictions, the core divide was consistent: supporters cast these measures as necessary responses to inequality and funding pressures, while critics warned that high-end taxpayers and investment could move, enforcement could prove difficult, and the long-term business climate could suffer.

Please find summaries of relevant articles with web links below. 

Federal

Murray and Wyden Target Billionaire Trusts, Introduce Landmark Legislation to Close Loopholes Sheltering Potentially Trillions in Untaxed Wealth – Office of Sen. Patty Murray
Senate Finance Committee Ranking Member Ron Wyden (D-OR) and Sen. Patty Murray (D-WA) introduced the Fair Trusts for Fiscal Responsibility Act of 2026. The bill would:

• apply a 1% tax on trust assets between $50 million and $100 million, 1.5% between $100 million and $250 million, 2% between $250 million and $1 billion, and 3% on assets above $1 billion;
• make the withholding fully refundable against estate tax liability, and cap total withholding at estate tax owed;
• impose new reporting requirements and penalties for noncompliance; and
• exempt charitable trusts, ERISA-qualified employee benefit trusts, and other trusts not typically used in estate planning.

Sens. Chris Van Hollen (D-MD), Angela Alsobrooks (D-MD), and Cory Booker (D-NJ) are also co-sponsoring the bill. For more information, see here: one-pager and bill text.

California

The California wealth tax has a loophole—here’s how much billionaires could save – MarketWatch
California’s proposed wealth tax contains a potential loophole: directly held real estate (or property in revocable trusts) is excluded from taxable wealth, while property held through LLCs is not. The WSJ reports that this creates opportunities for individuals to reduce their tax liabilities by restructuring ownership of real estate, potentially saving tens or hundreds of millions collectively.

A Proposed Billionaire Tax Exposes the Dual-Share Racket – Bloomberg Opinion
Justin Fox argues that California’s proposed wealth tax could hit some founders far harder than the advertised 5%. He argues that the bill appears to value their wealth using voting control rights tied to dual-class stock structures (but acknowledges that administrators may not take this approach). He says that could make the tax absurdly large for figures like Sergey Brin, Larry Page, and Mark Zuckerberg, while also highlighting a broader debate over whether founder control through supervoting shares is good for investors and corporate governance.

Steyer only candidate who supports California wealth tax during debate – NBC News
During Wednesday’s gubernatorial debate, candidates were asked if they supported the wealth tax. Democratic candidate Tom Steyer was the only one who supports the wealth tax.

2 influential economic scholars debate proposed California billionaire tax – DailyCal.Org
At a UC Berkeley debate on May 6, Arthur Laffer and Emmanuel Saez discussed California’s wealth tax proposal. Saez argued that it is a necessary “emergency” response to inequality and funding needs. Laffer warned it would drive wealth and business out of the state while failing to raise the projected revenue. The two economists agreed on broader tax reform ideas like taxing unrealized gains, but differed on whether a billionaire-specific tax is a fair and effective solution.

Douglas Schoen: Tax the rich, lose the rich – Orange County Register
Douglas Schoen, a longtime Democratic political consultant, argues that California’s proposed wealth tax will backfire by driving high-net-worth residents out of the state, shrinking the tax base, and potentially forcing future expansions of the tax to millionaires or broader groups. He cites estimates that billions of dollars in wealth have already left California, reducing the measure’s projected revenue far below initial claims, and notes that leading Democratic candidates for governor such as Xavier Becerra and Katie Porter have come out against the tax, warning it could undermine long‑term growth and funding for public programs.

Inside the Milken Conference: Billionaires, Tom Brady, Red-Light Therapy Masks – Bloomberg
The Milken Conference highlighted growing issues between ultrawealthy attendees and new efforts to “tax the rich,” especially California’s proposed wealth tax and New York’s moves to tax luxury second homes. Some investors, like Barry Sternlicht and Ken Griffin, expressed frustration with blue states for “going out of business” by raising taxes on high earners. Jensen Huang, CEO and Founder of NVIDIA, took the opposite line, saying he would simply pay what is asked and framing wealth taxes as a form of giving back. The newsletter also notes that quirks of corporate control—such as dual‑class shares held by founders like Sergey Brin, Larry Page, and Mark Zuckerberg—could make their effective tax burden under California’s proposal much higher than the headline 5%.

Fate of California’s Billionaire Tax Could Turn on Primary Race – Bloomberg Opinion
The California governor’s race could shape the fate of the proposed wealth tax by determining whether a future governor publicly backs or opposes it. Erika Smith says the measure already has broad voter support and major attention, but its momentum may depend as much on which gubernatorial candidates advance as on the ballot fight itself.

Opinion | California billionaire tax measure would cost more than it raises – The Washington Post
The Washington Post Editorial Board argues that California is already losing more than it stands to gain from the proposed wealth tax because high‑net‑worth residents and their family offices are leaving in anticipation of the tax. The Board notes that key figures such as Larry Page, Sergey Brin, Mark Zuckerberg, and others have left or shifted residency, and cited estimates that the resulting outmigration could cost the state billions annually in forgone income-tax revenue and GDP, even though the measure might raise only “tens of billions” and be expensive to enforce. The Board said that the initiative risks undermining California’s tax base and should be decisively rejected by voters.

Former CA Gov. Gray Davis: ‘A wealth tax is a self-inflicted wound’ – CNN Politics
Gov. Davis said a wealth tax is a “self-inflicted wound” because it takes away money for education and billionaires are leaving. Gov. Davis said he is against it, not to help billionaires, but for those who stay and have to fill the funding deficit left behind. Gov. Davis also noted that the top 1% in California is responsible for paying 45% of taxes in the state.

Illinois

IL progressive Democrats renew push for billionaire tax | Illinois Politics | Wand TV
Progressive Democrats in Illinois are renewing a push for several tax changes aimed at the very wealthy and large corporations as they head into final budget talks. Their plan includes a mark-to-market billionaire wealth tax that would apply to annual gains in billionaires’ assets (estimated to raise about $916 million a year), along with closing corporate tax loopholes (about $700 million) and adding a digital advertising tax on big tech platforms that lawmakers say could bring in roughly $1.1 billion. Republicans oppose the package, arguing Illinois already has record revenues and warning that new taxes on “job creators” would drive capital and jobs out of the state instead of solving its budget pressures.

Washington

Washington Supreme Court blocks referendum on new millionaires’ income tax – Axios Seattle
Washington’s Supreme Court ruled that the newly enacted millionaire’s tax cannot be challenged through a referendum. The ruling makes it more difficult for opponents to block it on the November ballot. The tax can still face a citizen initiative or separate constitutional challenge, but both paths are more difficult than a referendum. The other case challenging its constitutionality is still under consideration by the state Supreme Court.

Voters Get No Say on a Washington State Income Tax – WSJ
The Wall Street Journal Editorial Board argues that Washington’s Supreme Court improperly blocked voters from using a referendum to challenge the state’s new millionaires tax. The Board argues that lawmakers and judges sidestepped the state’s anti-income-tax tradition by labeling the tax “necessary” for government support. The Board also said the levy amounts to taxation without voter representation and predicts it may still face a separate constitutional challenge.

Seattle professor says ‘millionaires tax’ could impact state business climate, relocations – KOMO News
Joseph Phillips, a Seattle University economist, said Washington’s new millionaires tax could prompt some wealthy residents and business owners to leave, but the near-term economic impact is likely to be modest. His bigger concern is that the tax could damage Washington’s long-term business climate and discourage future entrepreneurs from starting companies there, even though most residents will not be affected.

New York City

NY Budget Deal Including Pied-à-Terre Tax, Weakened Climate Law – Bloomberg
This week, Gov. Kathy Hochul (D) released New York’s tentative $268 billion budget deal that would add a new pied-à-terre tax on high-value second homes in New York City, aimed at closing the city’s budget gap without raising broad-based income or corporate tax rates. The tax is expected to apply to non-primary residences worth over about $5 million and could raise up to $500 million a year, but key details are still being negotiated, complicated by the city’s current system of assessing condos and co‑ops at well below market value and by the need for stricter audits to prevent owners from claiming second homes as primary residences.

Taxes on Second Homes Are Springing Up Across America – WSJ
Cities across the U.S. are moving to tax second homes and vacant properties as a way to raise revenue and ease housing shortages, with proposals in New York City, Rhode Island, San Diego, Montana, and San Francisco. Supporters say the taxes can push owners to rent out empty homes and add housing supply, while critics argue they may drive away wealth people whose spending boosts local economies, may deter investment, and are unlikely to make a big dent in housing affordability.

‘Tax the Rich’ Won’t Save Cities Like New York – Bloomberg Opinion
Nicolas S. Rohatyn, a trustee of the Citizens Budget Commission, argues that “tax the rich” is a politically appealing slogan but not a sufficient strategy for cities like New York. He argues that the real problem is a concentrated and highly mobile tax base. He says cities should focus on broadening opportunity, reducing barriers to higher earnings, and better aligning tax policy with where wealth is created and realized, rather than relying too heavily on taxing a small group of high earners.

Do Higher Taxes Drive the Rich Away? Mamdani’s Plan Revives the Question. – The New York Times
NYC Mayor Zohran Mamdani is pushing to raise income taxes on millionaires to help fund universal child care and other priorities. Gov. Kathy Hochul (D) opposes the idea over fears of driving wealthy residents away. Supporters point to evidence that past millionaire tax increases like Massachusetts did not cause major exodus. Critics warn the city may be nearing a point where higher rates could start to hurt competitiveness and revenue.

Other

Sawiris Closes London Family Office After Relinquishing UK Residency – Bloomberg
Nassef Sawiris is closing his London family office after giving up UK residency, underscoring how Britain’s higher taxes on wealthy foreign residents are prompting some individuals and their firms to leave. The move is part of a broader shift that has weakened London’s private-wealth sector, with other high-profile departures and related family-office cutbacks following the UK’s tax changes.

Taxing the Wealthy Won’t Reduce Their Power: Allison Schrager
Allison Schrager argues that California’s proposed wealth tax is less about economics than about redistributing power. She says that using the tax code to curb billionaire influence would likely backfire by hurting growth, reducing entrepreneurship, and shifting influence toward government bureaucrats instead. Schrager also warns that defining “too much” wealth could expand over time and be used politically, concluding that taxing the wealthy may raise revenue but is not a good way to solve inequality or resentment.

Family Enterprise USA Action engages with legislators on Capitol Hill on behalf of family offices, successful 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.

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