Listening to far-left politicians clamor for wealth taxes on Americans may leave some with the mistaken impression that the rich don’t pay their fair share. In truth, while the United States generally has lower income taxes than rich European countries, residents of some of America’s wealthiest areas are already paying European income tax rates.
The U.S. gives unusual amounts of authority for subnational governments to tax income, so the top federal income tax rate of 37 percent only tells part of the story in most of the country.
The state and local income tax in New York City, for example, tops out at 14.776 percent. That means rich people there pay a top marginal income tax rate of 51.776 percent. California cities don’t have income taxes, but the state’s top rate of 13.3 percent means the wealthy pay a top rate of 50.3 percent.
How does that compare to combined national and subnational top income tax rates in Europe? Not that different.
The top marginal rates in Manhattan or San Francisco are higher than in Amsterdam, Berlin or Milan.
The people at the tippy-top of the income ladder often don’t make much ordinary wage income. Most of their income is from investments, which are subject to a wide array of tax treatment. A few European countries, such as Norway, have wealth taxes as well as income taxes. But most European countries that have tried wealth taxes have abandoned them because they were complicated to administer and didn’t raise as much revenue as expected.
It might seem unfair to compare only parts of the U.S. to entire countries, and it is unfair — to those other countries. In 2025, California had more billionaires than any country in Europe, and New York City had more than most of them.
Together, the Golden State and the Big Apple had more than 300 billionaires, more than any foreign country except China. They had more than Germany, France, the United Kingdom and Spain combined.
And that’s true despite having a much smaller population overall. The combined population of Germany, France, the U.K. and Spain is about 270 million, compared to 48 million for California and New York City combined.
Raising the top federal income tax rate by 11 or more percentage points would mean the wealthy in New York City and California would face higher rates than anywhere in Europe. At that point, many more would likely avail themselves of the opportunity to move to states without income taxes.
Jacking up the tax rate for the top bracket wouldn’t do much to tax the billionaires that the far-left wants to target. It would hit a bunch of small businesses, whose income passes through the individual tax code. And the top rates in two of the wealthiest Democratic-governed jurisdictions are at European levels already.
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