A growing segment of our population doesn’t want the American Dream to succeed.  That seems like an odd statement.  Policies proposed by select politicians espouse an affinity for the American Dream. Again and again, in speech after speech, we hear their promises to do all in their power to support and strengthen the American Dream so that it can embrace all Americans.

But do they?  Do our politicians really believe that hard work, self-sacrifice, personal responsibility, dedication to one’s goals, and an individual’s entitlement to the fruits of that effort, i.e., his or her legacy, which define the American Dream are beneficial to them?

Is achieving success and living the American Dream to be admired, or do our elected officials believe success is an out-of-date concept?  Even worse, do our elected officials believe that individual success is a threat to the collective power of government, and consequently something which must be restrained, confined, or —even punished?

How can we know the true feelings of our elected officials about something as foundational as the American Dream? The answer lies in government’s actions towards success.  A recent example of government’s true intention to punish success is the proposed imposition of annual wealth taxes on individuals who have committed no crime, except they have been successful. In eight jurisdictions, including California, Connecticut, Hawaii, Illinois, Maryland, New York, Oregon and Washington, legislative proposals have been introduced in 2023, which states represent about 60% of wealth in the U.S. (1)

But notice that these proposals tax wealth, not income. And “wealth” includes unrealized appreciation on assets. The taxation of unrealized appreciation has never been previously enacted in the US. While these respective state proposals differ in certain mechanical details, their overall goal is the same: to take annually from those who have been successful thereby reducing their power and influence. These wealth taxes are in addition to income taxes and estate taxes. 

Take California for example, and AB 259 (2). The bill would, for taxable years beginning on or after January 1, 2026, impose an annual tax of 1% on a resident’s worldwide net worth in excess of $50,000,000, or in excess of $25,000,000 in the case of a married taxpayer filing separately.

But, please don’t try to leave.  If a California resident decides to move and permanently establishes residence in another state, AB 259 would continue to apply to the former resident for the next four years on a fractional basis, effectively imposing a punishing disclosure requirement. To wit, “The California bill would also require taxpayers with illiquid assets to file yearly reports on their holdings and eventually pay the tax, even if they move out of state. Communist China doesn’t even do that.” (3)

Blood from a stone?

All this being said, there’s a tax payment to be made, and AB 259 presumes there is ample liquidity to make payment. Many people who would be subject to this tax are Silicon Valley entrepreneurs and investors whose “wealth” is largely tied-up in private companies – the growth engine of American business – and which are typically illiquid. How is it fair, or even practical, to expect taxation of interests in privately-held companies? An early investor in almost any tech company whose valuation soared in the period from 2017 to 2021 would, if these rules were applied then, had to have sold stock to pay the tax on the unrealized appreciation, which is largely impossible to do. By its nature, the ability to sell private stock was hampered by its status as just that, private, not to mention the possible existence of control restrictions on an employee’s/shareholder’s ability to sell stock to third parties. How can the government demand that the taxpayer to do something which is almost impossible to do, and that they are legally barred from doing?

The Great Reveal … Your Confidential Holdings

AB 259 would also establish a Wealth Tax Advisory Council “to determine an adequate level of annual funding and staffing for the administration and collection of the wealth tax imposed by this bill.” (2) What about your privacy? The Franchise Tax Board would value assets that aren’t publicly traded, via this council, including private equity interests, artwork and other financial assets. Think about it…a council privy to your records and how your private investments are valued? Imagine a breach of a resident’s confidentiality by a council that has no accountability.

Power of the Plaintiff’s Bar

Further, this council would have the power to use existing law, the False Claims Act, which provides that if a taxpayer presents a false statement (I.e, the value of an investment), the taxpayer could be subject to three times the amount of damages, penalties, and the costs of a civil action brought to recover them, and may indeed involve the Attorney General and the plaintiff’s bar. According to a recent Wall Street Journal article, “To spread the wealth around to plaintiff-bar donors, the bill would apply the state’s False Claims Act to wealth-tax records and statements. This means plaintiff attorneys could sue affluent individuals on behalf of the state for allegedly under-reporting assets. Plaintiff attorneys would be entitled to a share of the state’s recovery.” (4)

It should be emphasized that these various wealth tax proposals are at the state level. If you were to add wealth tax proposals at the federal level, such as the Billionaires Income Tax Act, which is legislation proposed by the Senate Finance Committee Chairman and co-sponsored by fifteen Democratic Senators (5), the burden on the successful entrepreneur would be staggering.

Are there precedents for these Wealth Taxes which have proven their intrinsic value?

Well, no. 

Even though similar wealth taxes have been proposed in European countries, they have been almost universally abandoned. Countries that used to have wealth taxes but then repealed them in the 1990s and 2000s include Austria (in 1994), Denmark (in 1997), Germany (in 1997), the Netherlands (in 2001), Finland, Iceland, Luxembourg (all three in 2006), Sweden (in 2007) (6).

Despite these policy failures in Europe, elements in our society continue to advocate for these measures while ignoring both the constitutionality of such proposals—which is suspect —as well as the terrible message it sends to American entrepreneurs. That message is: Work hard to help the United States be innovative so that our country can remain a leader in an increasingly competitive world but be prepared for both the state and federal government to deny you the fruits of your success. As a consequence, the legacies of hard-working successful individuals are at risk.

In summary, the legislative actions of various states and potentially the federal government speak convincingly. The American Dream must be given public praise but in private – through legislative action – it must be controlled and reduced. Do the vast majority of Americans believe this? Do they share this opinion? If they don’t subscribe to this philosophy, how has this narrative gained so much strength? If, however, it represents a misguided view of a fraction of our society, how can it be denied the influence it currently commands?

Can anything be done to lessen the negative influence of this narrative?

Many actions can be taken, but corrective actions need to be taken soon. Calendar year 2024 is an election year. In addition to the Presidential election ALL 435 seats in the US House of Representatives and 34 seats in the US Senate are up for election. It is not inconceivable that since all eight legislatures which have proposed these wealth taxes are controlled by one party, and if that party were to gain the Presidency, the “down ballot” effect of such a Presidential win, will encourage the passage of many of these proposals and the waterfall effect of the introduction of similar or more punitive proposals in other jurisdictions.

What therefore can be done?

Speak up – – tell your elected official how you feel not once but many times. Focus on those officials who are running for re-election. Get involved. Participate. Solicit others you know to join this effort. Let your voice be joined with others to deliver a clear and unambiguous message.

The American Dream is worth preserving. 

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1. BNY Mellon, “New State Wealth Taxes in the Cards for 2023?”
2. California Legislature – 2023-2024, Assembly Bill No.259, January 19, 2023
3. Wall Street Journal, “The State Wealth-Tax Alliance,” Editorial Board, January 24, 2023
4. Wall Street Journal, “California’s Wealth Tax Arrives,” Editorial Board, January 9, 2024
5. United States Senate Committee on Finance, “Wyden Leads Democratic Colleagues in Introducing Billionaires Income Tax,”

November 30, 2023

6. OECD (2018), The Role and Design of Net Wealth Taxes in the OECD, OECD Tax Policy Studies, No. 26, OECD Publishing,

Paris, https://doi.org/10.1787/9789264290303-en

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