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The Wealthy Don't Leave When States Tax the Rich, But It Sure Does Raise Revenue
Our findings support the case against tax flight: The number of individuals with a net worth of at least seven-figures continued to expand in both Massachusetts and Washington after tax hikes. The millionaire class has grown by 38.6 percent in Massachusetts and 46.9 percent in Washington over the past two years. The seven-figure clubs in those states saw their wealth grow by $580 million and $748 million, respectively.
We have witnessed a counterrevolution over the past 50 years where the nation’s wealth and income has concentrated at an extreme level in the hands of a small but powerful minority.
Not only did millionaires not flee the states imposing new taxes, but the states became richer. The four percent surtax on million-dollar incomes in Massachusetts and the seven percent tax on capital gains of $250,000 or more in Washington State succeeded in raising revenue — $2.2 billion for FY 2024 and $1.2 billion in its first two years of implementation, respectively.
These new resources have been invested in educational programs that support early learning, childcare, and free school lunches and community college. In the case of Massachusetts, some of the revenue collected is earmarked towards public transportation.
That experience contrasts with the failure of the Great Kansas Tax Cut Experiment that began in 2012. The Sunflower State lagged behind its neighbors in a number of economic categories and experienced revenue shortfalls. The experiment was abandoned five years later.
Lastly, the brief looks at the revenue potential of a wealth tax aimed at ultra-high net worth individuals. We identified individuals with $50 million or more in wealth across four states and estimated how much different taxes could raise. These individuals have the liquidity to pay and, as my colleague and former tax attorney Bob Lord has argued, need to have their rate of accumulation curbed.
A two percent wealth tax on this class of ultra-high net worth individuals has the potential to raise $7.4 billion in Massachusetts, $21.9 billion in New York, $700 million in Rhode Island, and $8.2 billion in Washington. This is a significant source of potential revenue that can be invested in a green transition, permanently affordable housing, and universal healthcare.
At the time of writing, legislators in Washington State are awaiting Governor Bob Ferguson’s signature to pass new taxes to help bring down their $16 billion budget deficit. Even a one-time 3% wealth tax could bring down the deficit from $16 billion to $3.7 billion.
We have witnessed a counterrevolution over the past 50 years where the nation’s wealth and income has concentrated at an extreme level in the hands of a small but powerful minority. They use their resources to increase their access to the state, buy up more assets, and squeeze the living standards of the working class. We have the policy tools at our disposal to reverse this trend. Let’s put progressive taxation to work.
After Building Progressive Power Among House Democrats, Jayapal Passes the Torch
She was elected first vice chair of the CPC in June 2017, just months into her freshman term in Congress. Explaining her foray into leadership, Jayapal affectionately said, "I blamed it all on Keith Ellison," a Minnesota Democrat who was then a congressman and caucus leader and is now his state's attorney general.
"He was very encouraging," she said of Ellison. "He knew that the whole reason I was running, because he had heard me talk about it on the campaign trail... was because I wanted to strengthen the power of the progressive movement inside Congress and figure out how we could be more effective working on the inside and the outside, which I was coming from."
Jayapal, who was born in India and came to the United States as a teenager for college, founded the immigrant advocacy group Hate Free Zone—which later became OneAmerica—after the September 11, 2001 terrorist attacks. Residents of the Seattle area elected her to Congress in 2016, during her first term in the Washington State Senate.
In politics, Jayapal has shared stories from her own life with the world, publicly writing and speaking about her experiences as an immigrant woman of color, a woman who had an abortion, and a mother to her trans daughter. She has welcomed the mentorship of Rep. Barbara Lee (D-Calif.), the first woman of color to co-chair the CPC and, as Jayapal put it on Instagram earlier this week, "one of the most courageous and effective progressive leaders I have had the privilege to know."
U.S. Reps. Barbara Lee (D-Calif.) Pramila Jayapal (D-Wash.), and Cori Bush (D-Mo.) talk with reporters in Washingotn, D.C. on May 31, 2023. (Photo: Tom Williams/CQ-Roll Call, Inc. via Getty Images)
Backed by leaders like Ellison and Lee—who is leaving Congress after this session—Jayapal jumped into the CPC hoping to transform it into "a caucus that could really have the power to stand up for working people and deliver." In 2018, she was elected co-chair with Rep. Mark Pocan (D-Wis.), and following 2020 caucus rule changes, she became a solo chair.
"What I realized when I came in is that we didn't really have the infrastructure we needed to support us to be powerful as a bloc of votes," said Jayapal, who utilized the skills and connections she developed as an organizer in the role she is now preparing to leave.
"I was able to come in and not only think about how you build power on the inside, but also how you coordinate with the outside," she said. "And that inside-outside strategy, and the trust I had, and the relationships I had, were really critical to my success in building the infrastructure here in Congress and sort of coalescing the movement around a set of priorities that we were then able to fight for and stand up for."
Jayapal recognized the need to hire staff and reform CPC rules to boost meeting attendance and caucus cohesion. She explained that "I felt very strongly about leadership transition to build the bench, and so I put in term limits for the CPC chair as well."
Thanks to that policy, she will pass the torch to Rep. Greg Casar (D-Texas) early next month. Jayapal, who will be chair emeritus, told Common Dreams, "I'm just really proud to have built an infrastructure that I can pass on to the next chair that just wasn't there before and will continue to get better, of course, with new leadership."
The 35-year-old incoming chair will be joined by Reps. Ilhan Omar (D-Minn.) as deputy chair and Jesús "Chuy" García (D-Ill.) as whip. They will face a Republican-controlled Congress and the second administration of President-elect Donald Trump.
"I'm honored to build on the legacy of Chair Jayapal," Casar said after the caucus election earlier this month. "I've fought back against extremist, egocentric autocrats in Texas for my entire adult life. The Democratic Party must directly take on Trump, and it'll be CPC members boldly leading the way and putting working people first."
Related: New Progressive Caucus Chair Ready to 'Fight Billionaires, Grifters, and Republican Frauds'
Trump won his first presidential contest the same day Jayapal was initially elected to Congress. On that night in November 2016, before the White House race was called, Jayapal described her victory as "a light in the darkness" and told supporters that "if our worst fears are realized, we will be on the defense as of tomorrow," according toThe Seattle Times.
After four years of fighting the first Trump administration, CPC members kicked off 2021 with a fresh opportunity to advance progressive policies: Although the Senate was divided, Democrats controlled the House of Representatives and President Joe Biden was sworn in—despite Trump contesting his 2020 loss and inciting an insurrection.
During Biden's term, which ends next month, the Jayapal-led caucus has successfully encouraged the Democratic president to pursue various executive actions promoting access to contraception, climate action, corporate accountability, higher wages, lower costs for essentials, and relief for immigrants from countries in crisis, among other priorities.
The caucus also played a significant role in enacting major pieces of Democrats' Build Back Better agenda. In the summer of 2021, Jayapal made clear to Congress and the president that House progressives would withhold votes from what became the Bipartisan Infrastructure Law—also known as the Infrastructure Investment and Jobs Act—unless they also passed legislation on the climate emergency and social issues.
Biden signed the infrastructure bill in November 2021—followed by the Inflation Reduction Act in August 2022. The delay was largely due to obstructionist then-Democratic Sens. Joe Manchin (I-W.Va.) and Kyrsten Sinema (I-Ariz.), who ditched the party in the aftermath and are both leaving Congress at the end of this session.
Although Jayapal wishes the second bill would have passed sooner, and tackled the country's childcare and housing crises, she said that she is still "particularly proud" of what the caucus was able to accomplish with that battle. As she told Common Dreams, "There would be no Inflation Reduction Act without Build Back Better, and there would've been no Build Back Better without the CPC."
Rep. Pramila Jayapal (D-Wash.) speaks at a "Go Bigger on Climate, Care, and Justice" rally on July 20, 2021 in Washington, D.C. (Photo: Shannon Finney/Getty Images for Green New Deal Network)
Those two legislative packages were "about changing the way that we thought of government's ability to fight for working people," she continued. They "were about delivering results to people that would matter, whether it was in terms of great jobs, whether it was in terms of taking on climate change, whether it was in terms of driving down the cost of prescription drugs, [or] unrigging the tax system so that the wealthier began to pay their fair share."
"All of those things were kind of fundamental and core to an economic agenda that worked for working people and poor people," said Jayapal, who has personally championed legislation including the College for All Act, Dignity for Detained Immigrants Act, Housing Is a Human Right Act, Medicare for All Act, Transgender Bill of Rights, and Ultra-Millionaire Tax Act—partnering with Senate progressives such as Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.), the founding chair of the CPC.
While the Congressional Progressive Caucus will have new leadership next year, Jayapal plans to remain engaged by providing advice and support as chair emeritus and by co-chairing the CPC Political Action Committee with Casar and Rep. Maxwell Frost (D-Fla.). Under the PAC's current heads—Jayapal, Pocan, and Rep. Jamie Raskin (D-Md.)—it "has grown from a $300,000 budget in the 2016 election cycle to raising $12 million over the past three election cycles," the group said Wednesday.
Jayapal told Common Dreams that she is "really proud of the fact that we've had an incredible record" for CPC PAC endorsements. Over the past decade, a majority of pre-primary backed candidates have won their general election races—often "pushing back on big money that came in, dark money that came in, sometimes in the millions," she said, pointing to Reps. Summer Lee (D-Pa.) and Delia Ramirez (D-Ill.) as examples.
Lee, Ramirez, and Jayapal were all reelected last month, but overall it was a devastating cycle for Democrats, who failed to win control of the White House and both chambers of Congress. The outgoing CPC chair is among those who have responded to the results by urging the Democratic Party to reject super PACs and uplift working-class voters going forward.
In a memo earlier this month, Jayapal, Casar, Frost and fellow CPC member Rep. Chris Deluzio (D-Pa.) called on the next Democratic National Committee chair, whoever it is, to "create an authentic... brand that offers a clear alternative and inclusive vision for how we will make life better for the 90% who are struggling in this economy, take on the biggest corporations and wealthiest individuals who have rigged the system, expose Trump's corporate favoritism, and create a clear contrast with Republicans."
Noting Republicans' aim to use their forthcoming federal trifecta to pass another round of tax cuts for the rich, Jayapal said that "when we fight against the tax cuts, the Trump tax scam 2.0, we should tie it to this: The Democratic Party is not beholden to corporate PACs and dark money. We are fighting for the people."
"There's a clear contrast between Trump and his billionaires... and Democrats who are fighting for the vast majority of Americans, the 99% of Americans who are out there struggling every day," she added. "That's the contrast we need to be able to draw."
In her final days as CPC chair, Jayapal is highlighting that contrast by slamming Trump and the billionaires who have his ear, like Elon Musk, for risking a government shutdown—which could begin Saturday—by derailing a bipartisan spending bill this week.
"The past 24 hours is the clearest demonstration yet of what Trump 2.0 will entail: The president of the United States allowing his unelected billionaire friends to control the government and enrich themselves at the expense of working people," she
said in a Thursday statement. "We cannot succumb to a government by billionaires, for billionaires."
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