States Should Consider Partial Wealth Tax Reforms

Document Type


Publication Date



This article is a contribution to Project SAFE (State Action in Fiscal Emergencies). In other essays in this project, we explain steps the federal government should take to help state and local governments cope with their looming budget crises. The federal government is much better positioned to manage these crises than states and localities and, ideally, it would act sufficiently to prevent the need for state and local governments to cut spending or raise taxes. However, we fear that the federal government may fail to act sufficiently, leaving states and localities with the need to make painful spending cuts, raise taxes, or both. Here, we make some suggestions for how states should respond if the federal government fails to act sufficiently.

Specifically, we argue that the states should consider adopting partial wealth tax reforms, at least temporarily, to raise needed revenue to weather the budget crises. There are at least two promising options that could be designed and implemented sufficiently quickly (at least in some states) to make good policy responses to the crises