Maine approved a 2% surtax on income above $1 million, projected to raise $150 million for education and healthcare. TJ Walker argues the tax will underperform because wealthy people can relocate or restructure earnings, and proposes targeting spending instead: property taxes on expensive homes, luxury car levies, and high-end restaurant taxes would generate more reliable revenue.
Chapters
Ultimize. Maine just did something that sounds simple, fair, and on the surface hard to argue with. It's raising taxes on millionaires. The state approved a new 2% surcharge on income over $1 million, pushing the top rate to about 9.15%, with a goal of raising roughly $150 million over 2 years to fund things like education. Housing and healthcare. And Maine is not exactly Silicon Valley. It's timber, lobster, tourism, and Stephen King. Yet even there, the numbers of million-dollar earners has been rising up about 15% recently. So politicians look at that and say, that's money on the table, let's go get it. Massachusetts did something similar, a 4% surtax on income over $1 million and it pulled in nearly $3 billion in one year. So, hey, sometimes it does work. Washington State followed. New York City is talking about it. This is not a fringe idea anymore. It's becoming standard playbook. And if you just stop right there, you might think, okay, case closed. Tax rich people more, raise more money, fund good things. Except real life is a little messier than campaign slogans because there's one inconvenient truth about wealthy people that almost every policymaker quietly understands. But rarely emphasizes. They're extremely good at not paying taxes they don't have to pay. Not through technical crime, not through scandal, through paperwork. If you're middle class, your tax strategy is basically hoping TurboTax doesn't crash. If you're very wealthy, your tax strategy is a whole team of professionals whose entire job is to legally move numbers around until the outcome looks, shall we say, friendlier. And here's the bigger issue. Wealthy people aren't rooted the same way everyone else is. They don't just live in one place. They have homes in multiple states quite often, often multiple countries. They're already traveling constantly, whether it's to the World Economic Forum in Davos or ski trips in Japan or showing up at the Academy Awards like it's a neighborhood block party. So when a state says, we're going to tax your income more, a meaningful percentage of wealthy people don't panic. They reschedule residency shifts. Income gets recognized somewhere else. Timing changes, structures change, all completely legal. It's not dramatic. There's no press conference. No one storms out yelling, I'm leaving Maine, at least not usually. Some of the New Yorkers do that. They just quietly stop being from Maine on paper. And this is where the policy problem kicks in, because if your goal is to raise revenue, you've just targeted the exact group that is most capable of sidestepping your policy. So what happens? You get great headlines, you get moral satisfaction, you get politicians saying, "We made the system fairer," and sometimes you don't get nearly as much money as you thought you would. In some cases over time you may even get less if enough high earners shift behavior or location. Now to be clear, this is not an argument against progressive taxation. I'm in favor of progressive taxation. It's an argument for effective progressive taxation because if the real goal is to fund public schools— good things, schools, infrastructure, healthcare— then the question isn't what sounds fair. The question is what actually collects revenue? And this is where the conversation gets a lot more interesting and a lot more practical, because wealthy people may be flexible with income, but they're much less flexible with lifestyle. They love big houses, they love expensive cars, they love high-end dining, they love living in exclusive communities with pristine roads, perfect utilities, and not a pothole in sight. And those things are a lot harder to move. You can reclassify income. You can't easily relocate a $5 million house every tax season. So if you actually want to capture revenue from wealth quietly, consistently, and effectively, you need to start taxing where the money is spent, not just where it's earned. Take property taxes. If someone owns a massive home, that's a fixed, visible income. Immovable asset. It's sitting right there. It's not going to Wyoming overnight. Or luxury consumption— cars over $100,000, car leases over $500 a month. That's not hitting working families trying to get to work. That's targeting discretionary spending. Restaurants where the average bill is over $75 per person— again, not exactly the local diner crowd. Or high-end developments. If you're building a community where the average home price is more than $1 million, maybe that community funds its own infrastructure, roads, utilities, services, instead of leaning on a broader municipality for public resources. None of this makes for great political slogans. No one ever ran on moderately adjusted luxury consumption structures. It's not exactly chantable. But it does work because here's the underlying reality: wealthy people don't spend all their income the way middle— middle-income people do, no doubt about it, but they do spend a lot. And if you design a system that captures those spending streams without making it easy to opt out, you can generate substantial revenue, often more than the headline-grabbing income taxes. Which brings us to the real decision policymakers have to make. Do you want to pass policies that feel good, or do you want applause or results? Because those are not always the same thing. There's a strong temptation in politics to go with the visible win—tax the rich. It sounds clean, it sounds just. In theory, I'm in favor of it. It sounds decisive. But if the underlying design allows a large portion of that tax base to quietly disappear, then what you've created isn't a solution, it's a press release. And the irony is the people you were trying to help, lower and middle income residents, don't benefit nearly as much as promised. So if you're serious about fairness and about funding the things government actually needs to fund, then the conversation has to shift. Less focus on symbolic wins, More focus on durable revenue, less emphasis on where income is reported, more attention to where money is actually spent because it's more trackable. Because in the end, the smartest tax systems aren't the loudest ones. They're the ones that quietly, consistently work and bring in money. That's what we really need. Now, some of you are listening to this saying, wow, it sounds like TJ's gone right wing. No, I want to raise money. And I would like for wealthy people, especially the super wealthy, to pay proportionally more. I'm not in favor of things that just create more paperwork and make tax attorneys richer and don't actually generate more money. So I'm willing to have an open mind. If Maine can show it's bringing in more money and it's not showing an exodus of people that somehow take jobs away, Let's try it. I'm skeptical. I will tell you the famed left-wing economist Thomas Piketty, I think summed it up correctly in his bestselling book a decade ago, which is to state the only real solution is a worldwide wealth tax. Now you can't really have a worldwide wealth tax without having some form of world government, which I understand is kind of a non-starter for most people. But until that time, it's simply too easy for rich people to shift residences, to shift income, to have tax dodges, whether it's in Ireland, whether it's in Switzerland. And that's why just making it simple of saying, okay, we're going to tax the rich— we already see how it's playing out in California. So many billionaires who have homes in California have just relocated to right where I am, South Florida. Not really helping. You know what's funny? People spend years trying to figure things out when most of the time they already know what to do. Speak more clearly, be more confident, build better daily habits. The issue isn't knowledge, it's follow-through. So if you are listening to this and thinking, yeah, I should probably work on that, Don't overcomplicate it. Just go to ultimize.com and get the free course. There's one on communication. There's one on habits. Pick whichever one hits you first and just start there. Simple, free, and actually useful. Ultimize.
