The debate over wealth taxes is about more than who pays more in taxes. It is how much visibility the government should have into people’s personal finances and how much power the IRS should have to scrutinize, value, and challenge what they own.
A federal wealth tax would represent a significant expansion of that reach. To enforce it, the government would need greater insight into taxpayers’ assets and the authority to determine the value of privately held businesses, investments, and other property. And when the IRS challenges a taxpayer, the individual can be left with the burden of producing the records and evidence necessary to prove the agency wrong.
That should be part of the wealth tax debate now, because states are already providing a preview of where this could lead. This November, California voters will decide whether to impose a one-time 5% tax on the net worth of residents over a certain threshold, a measure that qualified for the ballot this summer after backers turned in well over a million signatures. It is not the only state-level fight of its kind. Minnesota also came close to passing the nation’s first state wealth tax that stalled this year but is expected to return in 2027.
These fights are happening in statehouses and on state ballots, but the idea behind them is not a state-only idea. It is the same concept that keeps surfacing in Washington in proposals to tax unrealized gains. The fundamental challenge is the same: Taxing wealth requires the government to know what people own, determine what those assets are worth, and enforce its judgment when taxpayers disagree.
That means a federal wealth tax would not simply change the tax code. It could fundamentally change the relationship between taxpayers and the IRS, giving the agency greater visibility into personal finances, more discretion over asset valuations, and possibly more resources to enforce those decisions.
Before Washington even considers giving the IRS that kind of additional authority, the public should be asking whether the agency has earned it.
The patterns of abuse that mark the agency’s conduct are well documented. And results from a national poll of more than 1,000 U.S. adults show that people across party lines are well aware. Sixty-six percent said the burden of proof in a tax dispute should sit with the IRS, not with the taxpayer forced to disprove the agency’s claim. Seventy-eight percent said the agency should have to meet measurable performance standards rather than operate on its own terms. That is the environment into which state and federal lawmakers alike now want to hand new valuation and enforcement power. Most people already do not trust the IRS with the authority it has.
The state fights are the canary in the coal mine, foreshadowing what a federal wealth tax could eventually hand the IRS: broader authority to value, monitor, and act on a person’s assets. That is precisely why the time for federal lawmakers to go on the record is now, not after the midterm elections. Voters deserve to know where candidates stand not only on wealth taxes that would expand the IRS’s reach, but on the broader reforms needed to rein the agency in before it is handed any more power.
MAMDANI’S LIST STARTS SMALL. HISTORY PROVES WHERE IT ENDS
The Alliance for IRS Accountability has built a framework for what serious reform looks like. Our Presumption of Rights Agenda lays out a commonsense approach: reversing the burden of proof so the agency must substantiate its own enforcement actions, covering a taxpayer’s legal costs when the IRS loses a dispute, and holding the agency to measurable customer service standards. It is specific enough that any candidate can commit to it, or decline to, on the record.
With state wealth tax fights already previewing what an expanded federal role could look like, and with Election Day weeks away, voters should ask every candidate on their ballot a direct question: Will you fight for these reforms, or will you support handing the IRS more money and power before it answers for how it treats taxpayers today? The answer should not wait until after the votes are counted.
Chuck Flint is president and CEO of the Alliance for IRS Accountability.