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Several Democratic-led states in the U.S. are planning to increase taxes on wealthy residents to generate additional revenue through a variety of proposals, including one dubbed the “Taylor Swift tax.”
These moves come after the enactment of the One Big Beautiful Bill Act (OBBBA) by President Donald Trump and Republicans in Congress. The law permanently extended many of the 2017 tax cuts, included new tax relief measures, and reduced funding for programs such as Medicaid.
Democrats argue that these tax hikes are necessary to help plug state budget gaps and offset any lost federal funding for programs like Medicaid.
This summer, Rhode Island introduced a new tax on vacation homes valued at over $1 million, which has been nicknamed the “Taylor Swift tax” because the pop star owns a home in an affluent part of Westerly, Rhode Island. The tax is $2.50 for every $500 of assessed value above $1 million, which is estimated to add around $136,000 in property taxes for Swift’s $17 million luxury home.
Other states are also moving to raise taxes on wealthy residents:
- Montana plans to increase property taxes on non-primary residences while reducing rates for owner-occupied homes.
- Maryland has raised income tax rates on residents earning over $500,000 annually.
- Connecticut is considering higher income taxes for individuals earning above $250,000 (or $500,000 for couples).
- Washington raised its capital gains tax from 7% to 9%, focusing on transactions like stocks, bonds, and business interests, while real estate sales are excluded.
Historically, high taxes on wealthy residents have sometimes led to outmigration, as seen when Amazon founder Jeff Bezos moved to Florida to benefit from lower taxes.
The main goal of these measures is to increase state revenue and offset reductions in federal funding for social programs, though experts warn that heavy taxation could influence wealthy residents’ decisions and impact the housing market.
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