Many people do not enjoy paying taxes. But many voters see no problem with taxing the super-rich and giving them their “fair share.”
One way is to increase income tax. A person also has the option of imposing an annual or one-time wealth tax on everything above a certain mark.
Some governments seek to reduce taxes on the stagnant middle class or tax excessive wealth to offset social inequality. Others want to fill budget shortfalls.
Still others argue philosophically that excessive wealth should be limited because it no longer contributes to the well-being of those individuals.
Call to increase US income tax
The definition of rich is in the eye of the beholder. But typically, ultra-high-net-worth individuals have at least $30 million (€25.9 million) in investable assets, while the super-rich have $300 million or more.
In the US, former Massachusetts Governor, Senator and US Presidential candidate Mitt Romney considers capital gains loopholes as a big problem.
“We have reached a point where any solution to our nation’s economic problems will involve greater contributions from the richest Americans,” he wrote in a guest essay titled “Tax the Rich, Like Me.” new York Times In December 2025.
New York City’s new mayor, Zohran Mamdani, has proposed raising the city’s income tax rate from 3.9% to 5.9% on income over one million dollars annually.
In early March, Washington state lawmakers passed a new tax on personal income over $1 million. The measure awaits the governor’s signature. Others are considering similar measures.
These proposals matter because America is the world’s largest economy. It is also home to the most millionaires and billionaires, according to forbes calculation.
Who’s afraid of a little tax?
Brian Gale, a law professor at the University of California Berkeley Law School who specializes in taxation, said, “Taxing the very rich is fair, economically efficient, and advances other important goals, such as enhancing democracy in some countries.”
In many countries, the ultra-rich control such a large share of social resources that they can dictate political and economic outcomes, Gale says, leading to unhealthy politics and catastrophic economic consequences.
Gale says a major obstacle to taxing the ultra-rich is part of existing tax systems, as most impose taxes only when investment assets are sold.
“Superrich families can afford the luxury of selling only a small portion of their assets, allowing them to choose when and where to pay taxes,” he said.
who is a little scared Property Tax?
Instead of an income tax, how about adding up all the assets and then taxing that number: a wealth tax.
According to economists Christina Enache and Alex Mengden, 13 OECD countries have imposed a net wealth tax since 1965. tax foundationA nonprofit tax-policy think tank.
Today, only four countries have a wealth tax, Norway, Spain and Switzerland.
Enache and Mengden say that overall, the taxes generated little revenue and created administrative headaches. The second problem was legal challenges.
The German Constitutional Court ruled in 1995 that the country’s wealth tax was contrary to the principle of equality and declared it unconstitutional. As a result, Germany suspended the levy in 1997.
The Dutch Supreme Court ruled in 2021 that its country’s property tax violated European law regarding property rights and non-discrimination.
Property tax is difficult to calculate
When it comes to wealth tax, a major problem is tallying one’s assets.
It’s easy to count the cash, but what about all those houses, cars, private jets and investments? Not to mention the contents of art collections or safety deposit boxes. If this has to be done every year then it becomes more difficult and expensive.
According to Tax Foundation research, wealth taxes discourage savings and investment, hurting entrepreneurship in the long run.
Additionally, a wealth tax “could lead to capital flight and the transfer of wealthy individuals to neighboring jurisdictions,” Mengden and Enache said. “Following Norway’s wealth tax increase of 0.1 percent, the country saw an exodus of high net worth individuals to countries such as Switzerland and the UK.”
UC Berkeley’s Brian Gale is less convinced that ultrarich people could more easily transfer their wealth rather than allowing it to be taxed. “For example, good legal design can make it more difficult for wealthy investors to avoid taxes,” Gale said.
Can California lead the way?
When it comes to a new wealth tax, California could lead the way with a lump sum tax of 5% on those worth more than $1 billion.
If it ends up in the November vote, it will be a major test for a major economy. Strong growth in 2024 makes the state world’s fourth largest economy Overall behind America, China and Germany.
Supporters say the tax will increase revenue. Critics say it will drive out the wealthy who will relocate to Texas, Florida or Nevada.
Governor Gavin Newsom, tech leaders and possibly many of the state’s nearly 200 billionaires are against the idea. Their biggest concern is that the tax takes into account illiquid assets and unrealized profits.
This means that theoretical “paper gains” on the stock or property will be taxed. Alarmists fear this could force some people to sell their homes or controlling stakes in companies they founded just to pay their tax bills.
Governments have a lot of levers when it comes to taxation, but they need to be used wisely if the goal is to make everyone pay their fair share.
Edited by: Rob Mudge