An Update on Wealth Taxes and Taylor Swift

Transcript of Podcast Episode 407

Hello, this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode: an update on wealth taxes and Taylor Swift.

Back in May of 2026, we offered a quick update on the concept of wealth taxes, an idea that has gained momentum over the last few years. The situation has changed considerably since our last update. While wealth taxes are intended to target a very small percentage of the population, their implications are wide-ranging.

A wealth tax takes a completely different approach from a sales, income or estate tax. It’s a tax imposed on someone’s net worth. Here’s an example. Let’s say there’s a two percent wealth tax on individuals with a net worth above $100 million in a particular state. If you’re lucky enough to have a net worth of $1 billion, you would pay on the difference of $900 million, resulting in a tax bill of $18 million. Some proposed wealth taxes are written to occur annually, while others are written as a one-time levy.

In California, Proposition 40 is a proposed one-time tax of 5 percent on people with a net worth of $1 billion or more. The tax is designed to raise money for healthcare, education and food assistance. Proponents say the new measure will boost critical social infrastructure[1] and address income inequality.[2] Opponents counter that a wealth tax will drive people and businesses away from the state.[3]

At the time of our last discussion, it was unclear whether the proposal would make it to a formal referendum. It has, and California voters will get the final say in the November election.

Whether it passes, and what will happen once the one-time levy is complete, is still up in the air. Even though it is a one-time tax, there is language in the proposed law that suggests there may be some flexibility to re-impose the tax at a later date.[4]

So how exactly does Taylor Swift fit in? Over 3,000 miles away, her financial team might just be experiencing some “bad blood” these days. In Rhode Island, there is a new tax, officially known as the “Non-Owner-Occupied Property Tax,” but commonly referred to as the “Taylor Swift Tax,” which took effect on July 1. It is a levy on residential properties worth more than $1 million that aren’t occupied by the owner or a tenant.

Swift has a mansion in Watch Hill worth an estimated $28 million, meaning that, under the new rules, she now owes an extra tax of approximately $136,000. Overall, the tax is expected to generate $24.5 million for the state in its first year.[5]

While it’s not a wealth tax per se, opponents echo some of the same concerns as California taxpayers. In both states, the fear is that the new tax will deter people from investing in their state and drive wealthy taxpayers elsewhere.[6]

At the federal level, the question of whether a wealth tax is permitted under the U.S. Constitution is a matter of intense legal debate. The federal income tax began in 1913 after the 17^th Amendment was passed to specifically authorize it. Many experts believe that a federal wealth tax would not currently pass a constitutional challenge, and it would likely take another amendment before it is allowed.[7]

Also, if a federal wealth tax ever did become law, some people fear that its scope will eventually expand. When the income tax system started back in 1913, only 1 percent of the population actually had to pay it, and at a rate of only 1 percent of net income.[8] Today it’s more like 60 percent who pay the tax,[9] and the maximum rate is 37 percent.[10] Some people believe that a wealth tax could be heading in the same direction, without any relief from other forms of taxation.

But that assumes that the proposed wealth taxes, like the one in California, will pass and be effective. Over at Financial Advisor magazine, author Cristina Enache, an economist for the Tax Foundation, has her doubts. As she puts it, “The evidence also suggests that wealth taxes harm the very demographic groups they are trying to help. Though they are often framed as affecting only the richest households, their economic effects extend much further by reducing capital formation, discouraging entrepreneurship, curtailing wage and employment growth, and ultimately weakening the overall economy.”[11]

But, in conclusion, none of this matters if the measure doesn’t pass. Prediction markets in California seem to be leaning towards a no vote, but of course, that can change.[12] And even if the answer is yes, legal challenges are widely expected.

Several other states, including Illinois, Maryland and Washington, are watching the events in California very closely. Each of those states have introduced wealth tax legislation of their own.[13]

[1] Allyn, Bobby. “Proposed California wealth tax sparks debate: Will billionaires leave the state?” NPR.org. https://www.npr.org/2026/08/20/nx-s1-5935597/california-billionaires-wealth-tax-sergey-brin (accessed September 24, 2026).

[2] Young, Robin and Tong, Scott. “Could a tax on billionaires solve California’s inequality crisis?” NPR.org. https://www.npr.org/2025/12/10/nx-s1-5639936/could-a-tax-on-billionaires-solve-californias-inequality-crisis (accessed September 25, 2026).

[3] Enache, Cristina. “Why Wealth Taxes Always Fail.” Financial Advisor. https://www.fa-mag.com/news/why-wealth-taxes-always-fail-88019.html (accessed September 24, 2026).

[4] Henderson, David. “California Wealth Tax Would Spare No One.” The Wall Street Journal. https://www.wsj.com/opinion/california-wealth-tax-would-spare-no-one-fa7ac4eb (accessed September 24, 2026).

[5] White, Tim. “‘Taylor Swift tax’ goes into effect in Rhode Island. Here’s how many could pay.” WPRI.com. https://www.wpri.com/target-12/taylor-swift-tax-goes-into-effect-in-rhode-island-heres-how-many-could-pay/  (accessed September 24, 2026).

[6] Pugh, Cameron. “Rhode Island’s ‘Taylor Swift tax’ on vacation homes aims to boost affordable housing.” The Christian Science Monitor. https://www.csmonitor.com/Business/2026/0910/taylor-swift-wealth-tax-rhode-island (accessed October 26, 2026).

[7] Bishop-Henchman, Joe. “Is a Wealth Tax Constitutional?” Ntu.org. https://www.ntu.org/foundation/detail/is-a-wealth-tax-constitutional (accessed September 24, 2026).

[8] National Archives. “16th Amendment to the U.S. Constitution: Federal Income Tax (1913).” Archives.gov. https://www.archives.gov/milestone-documents/16th-amendment (accessed September 24, 2026).

[9] Tax Policy Center. “Who Will Pay No Federal Individual Income Tax in 2025?” Taxpolicycenter.org. https://taxpolicycenter.org/fiscal-facts/who-will-pay-no-federal-individual-income-tax-2025 (accessed September 24, 2026).

[10] Internal Revenue Service. “Federal income tax rates and brackets.” IRS.gov. https://www.irs.gov/filing/federal-income-tax-rates-and-brackets (accessed September 24, 2026).

[11] Enache, Cristina. “Why Wealth Taxes Always Fail.” Financial Advisor. https://www.fa-mag.com/news/why-wealth-taxes-always-fail-88019.html (accessed September 25, 2026).

[12] DeFi Rate. “Will the California billionaire wealth tax pass? Traders see a 28% chance” Defirate.com. https://defirate.com/prediction-markets/california-wealth-tax/ (accessed September 24, 2026).

[13] Finseca. “Finseca Policy 02/24/26: State Wealth Tax Blitz & US Deficit Updates.” Finseca.org. https://www.finseca.org/finseca-policy-02-24-26-state-wealth-tax-blitz-us-deficit-updates/ (accessed September 24, 2026).

This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares^®. The content provided is intended for educational and informational purposes only. Information is provided in good faith. However, the Company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information.

The information presented is designed to provide general information regarding the subject matter covered. It is not to serve as legal, tax or other financial advice related to individual situations, because each individual’s legal, tax and financial situation is different. Specific advice needs to be tailored to your situation. Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation.

To help reach your goals, you need a skilled professional by your side. Contact your local Security Mutual life insurance advisor today. As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives. For more information, visit us at SMLNY.com/SMLPodcast. If you’ve enjoyed this podcast, tell your friends about it. And be sure to give us a five-star review. And check us out on LinkedIn, YouTube and Twitter. Thanks for listening, and we’ll talk to you next time.

Tax laws are complex and subject to change. The information presented is based on current interpretation of the laws. Neither Security Mutual nor its agents are permitted to provide tax or legal advice.

The applicability of any strategy discussed is dependent upon the particular facts and circumstances. Results may vary, and products and services discussed may not be appropriate for all situations. Each person’s needs, objectives and financial circumstances are different, and must be reviewed and analyzed independently. We encourage individuals to seek personalized advice from a qualified Security Mutual life insurance advisor regarding their personal needs, objectives, and financial circumstances. Insurance products are issued by Security Mutual Life Insurance Company of New York, Binghamton, New York. Product availability and features may vary by state.​