Money Talks When Money Walks
19th October 2026
This November, California voters will decide whether a fraction of the state’s population should pay a 5% wealth tax to help fund public programs. Proposition 40 would make roughly 200 of the richest Californians bail out the state’s deficits and save the budget for another year of easy spending.
California is not the only blue “paradise” with this plan. Nationwide, at least 10 Democrat-run states facing pressure to deliver on promises to expand welfare programs have reflexively reached for the wallets of the wealthy. The appeal is obvious: These taxes fall on relatively few voters, while the resulting revenue can finance programs benefitting a far larger population.
However, taxing the rich is not a “get out of debt free” card. It’s a way for states to ignore their own financial mismanagement while forcing their highest earners and most profitable businesses to pick up the slack. When progressive taxes push high earners to relocate to more business-friendly states, they take with them investments, charity, productive businesses, job opportunities, and taxable income.
Despite these consequences, a wave of income tax revisions is hitting blue states. Connecticut Democrats aim to raise the top marginal rates to 7.5% for earners over $250,000 and 7.99% for those making over $500,000. Michigan’s ballot proposal would levy a 5% tax on individual income over $500,000. New York City Mayor Zohran Mamdani proposed a 2% income tax increase on residents making $1 million, creating a top marginal rate of nearly 17%. Rhode Island has even approved a 3% surtax on income above $1 million.
Although taxing the rich may appear to be an attractive source of revenue for government officials, it comes at a cost. Massachusetts provides perhaps the best test case.