The action moves down a level

For most of the past decade, the headline wealth-tax debate has been federal. Senator Elizabeth Warren’s Ultra-Millionaire Tax — a 2% annual tax on net worth above $50 million, with a 1% surcharge on billionaires — has been introduced repeatedly without advancing. With Republican control of Congress and the White House, and a federal tax-and-spending law (the 2025 reconciliation act) that cut Medicaid and SNAP while delivering tax cuts that largely benefit high earners, the federal version is not moving.

The states are moving instead. In 2026, two of them have done something concrete. Washington enacted a 9.9% tax on income above $1 million. California is sending a one-time 5% tax on billionaires’ net worth to the November ballot. These are different instruments solving the same political problem from opposite ends, and both are worth understanding precisely.

Two different mechanisms

The distinction between an income tax and a net-worth tax is the whole story here.

• An income tax falls on the flow — the money a person receives in a given year. Washington’s SB 6346 applies a 9.9% rate to income above $1 million; the first $1 million is exempt. It is, in form, a marginal tax on a slice of annual earnings.
• A net-worth (wealth) tax falls on the stock — the total value of what a person owns, minus what they owe, at a single moment. California’s Billionaire Tax Act would apply a 5% rate to the net worth of residents worth $1 billion or more, measured on a fixed date.

Income taxes are administratively familiar; 41 states already levy one. Net-worth taxes are not — no US state currently has one, because they require the government to value every asset a person holds, including illiquid ones like privately held company stock, art, and real estate. That valuation problem is the central practical objection to wealth taxes everywhere they have been tried.

What Washington did

Governor Bob Ferguson signed SB 6346 on March 30, 2026. The tax takes effect for tax year 2028, with the first payments due in April 2029, and is projected to raise roughly $3 billion a year — meaningful money in a state facing a multibillion-dollar budget gap.

The interesting part is constitutional. Washington has had no personal income tax since the 1930s. In Culliton v. Chase (1933), the state Supreme Court struck down a voter-approved graduated income tax, reasoning that income is “property,” that the state constitution requires all taxes on a class of property to be uniform, and that a graduated rate is therefore unconstitutional. That precedent has blocked an income tax in Washington for nearly a century.

The drafters of SB 6346 are betting on a more recent decision. In Quinn v. State (2023), the state Supreme Court upheld Washington’s 7% capital-gains tax by characterizing it not as a property tax but as an excise tax — a tax on the act of selling assets, rather than on the assets themselves. Excise taxes are not subject to the uniformity clause. SB 6346 is built to fit through that same opening, and the litigation over it — a challenge from the Citizen Action Defense Fund was promised the day it was signed — will turn on whether a tax on the receipt of income can be characterized as an excise rather than a tax on income-as-property.

What California is proposing

The California measure is more aggressive in design and narrower in reach. The Billionaire Tax Act would impose a one-time 5% tax on the net worth of individuals worth $1 billion or more, measured at the end of 2026, with payment due in April 2027 (or in five annual installments, with a deferral charge). Backed by the healthcare union SEIU-UHW, it qualified for the November 2026 ballot in April 2026 with roughly 1.6 million signatures, well above the required threshold. Proceeds would go to a reserve fund earmarked for healthcare and food assistance.

The legal questions are different from Washington’s. California’s constitution caps the property-tax rate at a low fraction of a percent, so a 5% net-worth levy works only if it is, again, characterized as an excise tax — here, on the privilege of holding great wealth as a California resident — rather than a property tax. Critics argue that distinction will not survive a court. There are additional challenges: that taxing people based on residency on a past date raises due-process retroactivity concerns, and that the measure routes revenue around Proposition 98’s school-funding guarantee. Opponents have filed competing constitutional amendments to block it.

The revenue case is also contested. California’s Legislative Analyst’s Office estimated the one-time tax could raise tens of billions of dollars, while warning of a smaller ongoing loss — on the order of hundreds of millions a year — if some of the state’s roughly 200 billionaires relocate. Notably, Governor Gavin Newsom, a Democrat, opposes the measure.

Why the states, and why now

Three forces explain the shift.

First, federal gridlock. With no path for a federal wealth tax, the energy has nowhere to go but down a level. And first-mover evidence at the state level matters. Massachusetts voters approved a 4% surtax on income over $1 million in 2022. Despite persistent claims that it would drive wealthy residents out, the state expects to collect roughly $2.4 billion from it in fiscal 2026 — slightly more than its first full year. The out-migration debate is unresolved and the data is genuinely contested, but the surtax has not collapsed, and that record makes other states bolder. Maine added a 2% surcharge on income over $1 million in April 2026.

Second, state budget pressure. The 2025 federal law shifted costs for Medicaid and food assistance onto states. Legislatures looking to backfill those programs are looking at their highest earners.

The states are also a testing ground. Washington’s excise-tax theory and California’s net-worth mechanism are, in effect, live experiments in whether these taxes can be designed to survive a court and an accountant. Whatever the outcomes, they will shape the next federal attempt.

What to ask your representatives

• Does your state legislator support a high-income or wealth tax, and if so, structured as an income tax, an excise tax, or a net-worth tax — and why that choice?
• If your state is weighing one, what is the plan for the valuation and out-migration problems, and what independent revenue estimate are they relying on?
• Would they condition new high-income revenue on protecting specific programs — Medicaid, food assistance, schools — rather than the general fund?
• For federal representatives: where do they stand on the Ultra-Millionaire Tax, and on the apportionment question that any federal wealth tax must answer?