Federal Tax Cuts for the Wealthy Are Bankrupting States. Some Are Fighting Back.

A year ago, Republicans in Congress passed the wildly unpopular “One Big Beautiful Bill” — setting off one of the greatest transfers of wealth from working people to the wealthy in history.

The political, social, and cultural makeup of our home states — Washington and Kentucky — may be different, but the impacts of the law are the same: deep cuts to health care and food assistance as well as enormous tax breaks to the wealthy.

And as different as our states may seem, we are both pushing back against these harmful cuts by fighting for a tax code that serves everyone, instead of one that favors the wealthy and corporations at the top.

One effective, popular solution to begin undoing the harm of federal cuts is for states to step up to tax the wealthy — a group that has benefitted more than anyone else from the law.

In Washington, a movement of people got lawmakers to pass a historic Millionaires Tax, a 9.9-percent tax on household income exceeding $1 million per year. When millionaires start paying this tax in 2029, Washington State is estimated to receive an additional $3.7 billion in its budget for health care, affordable child care, and other public services at a risk of serious harm from federal cuts.

This new tax will also fund a dramatic expansion to Washington’s tax credit for lower-income families, providing cash support to pay for groceries, catch up on rent, or buy school supplies.

Some people would like to believe that taxing the wealthy is not popular in states like Kentucky. That’s a lie.

In a recent poll, a solid majority (67 percent) of Kentuckians support the idea. And nearly three-fourths of Kentuckians said lawmakers should focus on improving schools, improving health care, and bringing down the cost of living — things that can be funded by taxing the wealthy — rather than reducing taxes across the board.

While lawmakers in states like Kentucky are unwilling to pass higher taxes on the rich right now, Kentucky’s legislature, under pressure from advocates, recently passed a budget that will likely pause planned income tax cuts for at least three years, putting the brakes on more giveaways to the wealthy.

It’s not just our states: Maine, Rhode Island, and Hawai’i all raised taxes on the wealthy this year, while more red states are questioning their tax cuts.

Massachusetts, which passed a “Fair Share Amendment” surtax on millionaire incomes in 2023, expects to collect at least $300 million more in revenue this year from the tax — an 11 percent increase over last year’s forecast. This will finance more statewide public transportation and education programs.

While there is strong momentum behind taxing the wealthy, some ultrarich people and their allies are using everything in their arsenal to undo these bills or stop them in their tracks — from legal challenges in Washington state to attempting to cut the income tax rate in Massachusetts. And in Republican-controlled states, the outside billionaires and right-wing extremists continue to push to make tax systems even more unequal.

But the fight to ensure everyone pays their fair share isn’t about “punishing” wealth. It’s moral and practical.

When working families can’t put food on their table and access life-saving care, we’re all worse off. Whether you live in a red state or a blue state, what matters is that everyone gets a chance to survive and succeed. That means making sure our schools and libraries are kept open, our emergency services are adequately staffed, and our roads and infrastructure are kept safe.

That’s why the need for state revenue to protect vital services is as clear as day. What families want — in Kentucky, Washington, and everywhere else — is the freedom and ability to take care of their families and the opportunity to thrive.

This piece was first published on our sister site OtherWords.org.