Across the country, a number of states are pursuing significant tax increases in response to escalating spending plans. Rather than focusing first on slowing the growth of spending, many are proposing new revenue streams to close deficits and sustain expanding government programs. Among the most prominent ideas are wealth taxes aimed at high-net-worth individuals and targeted excise taxes on specific goods and activities.
One national publication even describes the dynamic this way, “But states have started fighting back. In the 2026 legislative session alone, lawmakers from at least 19 states have introduced more than 100 bills that look to rein in rampant wealth hoarding, as well as the runaway cost of living. And states are uniquely positioned, organizers say, to take action in this moment, particularly through tax laws that could redistribute wealth.”
These proposals are being advanced as pragmatic fiscal solutions. But taken together, they reflect a broader shift in tax policy — one that relies less on broad-based, neutral tax codes and more on selective tax increases designed to generate revenue from narrower segments of the population.
A wealth tax, as the Tax Foundation explains, is imposed on an individual’s net wealth — the market value of total assets minus liabilities. In practice, these proposals often go beyond traditional income taxation to target assets such as stocks, intellectual property, artwork, or vacation homes.
Massachusetts and Maryland have already moved in this direction. Rhode Island enacted what critics dubbed the “Taylor Swift tax,” targeting high-value second homes. California is considering a ballot initiative imposing a one-time 5 percent tax on individuals with assets exceeding $1 billion. Minnesota, Connecticut, Illinois, Michigan, Washington State, and others are debating “millionaires’ taxes” or higher top rates to close budget gaps.
The justifications are predictable. Lawmakers cite federal funding changes, healthcare costs, education spending, or alleged inequities created by federal tax reform. Supporters argue the wealthy must “pay their fair share.” Even former Senator and Republican presidential nominee Mitt Romney argued in Wall Street Journal that tax increases are necessary to address the national debt crisis.
But whether the issue is the $39 trillion national debt or state-level shortfalls, the root cause is the same: uncontrolled spending. In Rhode Island, spending has risen more than 50 percent since the pandemic. In Washington State, spending surged 60 percent despite multiple tax increases. In Illinois and California, structural deficits persist after years of high-tax policies.
Rather than reassessing spending commitments, many policymakers are treating them as untouchable. As economist Veronique de Rugy has argued, when spending growth is considered inevitable and restraint politically impossible, the next move is to blame “the rich” and demand more taxes.
There is also a growing divide among states. Since 2021, 23 states, including Iowa, have lowered income tax rates in pursuit of competitiveness. Iowa helped lead the flat tax revolution and now ranks among the more competitive income tax states in the nation. Meanwhile, a smaller group of states is doubling down on high rates and exploring new wealth taxes.
This divergence is already reshaping migration patterns. High earners and businesses are increasingly leaving high-tax states for those with lower burdens. Wealth taxes may be marketed as targeting only billionaires, but as de Rugy notes, wealth is often tied up in productive investments and operating businesses. Reducing returns on saving and investment ultimately slows productivity, wages, and job growth across the broader economy.
Yet wealth taxes are only one piece of a larger trend. Some states are also pursuing targeted excise taxes designed not just to raise revenue, but to influence behavior, or to discourage constitutionally protected activities.
Maryland legislators, for example, are considering an 11 percent excise tax on firearms and ammunition. California has already enacted a similar 11 percent tax, and Colorado has adopted a 6.5 percent tax. Other states, including Massachusetts, New York, Vermont, Virginia, and Washington, are exploring similar measures.
These taxes are being framed as “public safety” initiatives, meant to fund gun control programs. But they raise a deeper constitutional concern. The Second Amendment explicitly protects the right to keep and bear arms. Is it appropriate for a state or locality to single out a constitutionally protected activity for a special financial penalty?
Excise taxes on firearms function much like “sin taxes” on cigarettes or soda — designed to discourage behavior while raising revenue. But firearm ownership is not a vice; it is a constitutional right.
If a state can impose a special tax that makes exercising Second Amendment rights more expensive, what principle prevents similar treatment of other rights? What if lawmakers imposed a surcharge on printing presses, news subscriptions, or digital platforms to fund “misinformation” initiatives? Americans would immediately recognize that as an assault on the First Amendment.
The broader concern that bridges wealth taxes, firearms taxes, and “sin” taxes, is that the tax code is increasingly being used as a tool of social engineering. It becomes a two-for-one strategy: raise revenue to sustain expansive spending priorities while simultaneously advancing ideological goals.
President Calvin Coolidge warned that “the power to tax is the power to destroy.” He understood taxation not merely as an economic matter, but as a moral one. Excessive or targeted taxation can erode property rights and undermine liberty.
Iowa has taken a different path. Under Governor Kim Reynolds and the legislature, income tax rates have been lowered, the tax code simplified, and constitutional protections strengthened — including explicit protections for the Second Amendment.
But Iowans cannot be complacent. Vigilange is required. The policies being debated in Maryland, California, Minnesota, and elsewhere did not appear overnight. They emerged gradually, often justified as temporary fixes for budget gaps or targeted measures affecting only a narrow group. Tax policy can do more than fund government. It can reward or punish, encourage or discourage, protect or undermine liberty. If spending discipline is abandoned and taxes become tools of redistribution and social engineering, the consequences extend far beyond state balance sheets. The damage can be difficult to reverse.
Print a PDF