Overlapping states and the scalar politics of millionaire’s taxes in contemporary America

Surtaxes on the super-rich have become increasingly prevalent across the advanced industrialized world in the face of the ongoing post-2008 fiscal crisis of the state.  This is particularly so in the United States, where so-called ‘millionaire’s taxes’ at the subnational scale have become a popular solution to revenue collapses set off by the Great Recession.

Why have millionaire’s taxes popped up in some places and not others?  While such taxes are described by proponents and opponents alike as blows for economic ‘fairness’ and social equality, this paper argues instead that millionaire’s taxes are better understood as strategies of local ‘top-bottom’ political coalitions seeking to reproduce themselves through the exploitation of a structural niche in American federalism and the global political economy.  At the national scale, capitalists and state elites set the broad contours of tax policy and political-economic regulation to produce and promote the super-rich, particularly in the financial sector.  At the subnational scale, ‘top-bottom’ coalitions of white professionals and working class and poor racial minorities in turn tax the super-rich at the margin by exploiting the latter’s relative territorial fixity.  Leaders of these coalitions remain sensitive to overexploiting this niche, however, which would spur the relocation of financial activities beyond the state’s taxing powers and thus cast more of the tax burden back upon a mass electorate accustomed to tax cuts.  The result is a tenuous equilibrium between ‘progressive’ political interests and globalized finance amounting to tacit left political support of the financial sector and a perverse material interest in inequality.  Examples of this scalar politics from New York and California are offered.