A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.A new “blue wave” of tax hikes on the wealthy is rippling through state legislatures, as Virginia, Washington state, Rhode Island and others join California in calls for higher taxes on top earners and billionaires.With states facing potential cuts in federal aid and Democrat lawmakers emboldened by rising populism and a growing economic divide, legislators and governors in many blue states are preparing a range of new taxes on the wealthy. At the same time, many red states continue to cut or eliminate income taxes to become more competitive.”What you’re really seeing is divergence,” said Lucy Dadayan, principal research associate and state tax expert at the Tax Policy Center at the Urban Institute. “On one side, some states are doubling down on rate cuts, rebates, and tax competitiveness. On the other, some are turning to targeted surtaxes on high earners as a way to fund fast-growing priorities without raising broad-based taxes.”While tax hikes are floated by left-leaning state legislators almost every year, the latest push has added momentum. Inflation has increased the economic pressure on middle- and lower-income earners, sparking renewed calls for higher taxes on the wealthy to offset higher health care and education costs. State spending has continued to rise since Covid, renewing the need for revenue.Many Democratic leaders are also heralding a tax hike on high earners in Massachusetts as proof that the wealthy won’t flee. In 2022, Massachusetts voters approved “The Fair Share Amendment,” a 4% surtax on income over $1 mi …
