While there are many tax reform proposals to tax the super-rich these days, the discussion has centered on the federal or national tax level. On the other hand, Brian Galle (Georgetown), David Gamage (Missouri), and Darien Shanske (UC Davis) have been brilliantly contributing to state-level tax policies to address inequality. A notable piece is Solving the Valuation Challenge: The ULTRA Method for Taxing Extreme Wealth, 72 Duke L.J. 1257 (2023, reviewed here), where the authors developed the unliquidated tax reserve accounts (ULTRA) system as a part of drafting comprehensive annual wealth tax reform proposal for the state of California. Recently, the authors produced another excellent piece on the state-level tax proposal for taxing the super-rich—Money Moves: Taxing the Wealthy at the State Level, 112 Calif. L. Rev. ___ (2025), which is worth introducing for this week's review.

Traditional scholarship suggested that introducing a state-level wealth taxation would trigger wealthy migration, economic distortion, and would yield minimal additional revenue. In Money Moves, Galle, Gamage, and Shanske argue that this view is misguided. The authors distinguish the mobility of taxpayers from that of money. While taxpayers' physical relocation is difficult to restrict, recent evidence shows that taxpayers are relatively less likely to move in response to changes in tax policy. In contrast, the authors emphasize the high mobility of income and capital—in other words, "money moves.” Arguing that the location of taxable income is quite responsive to tax rates, the authors propose solutions for these cross-border income shifting practices. To counter tax-avoidance mobility, the authors examine various wealth and mark-to-market tax designs at the state level. Their analysis strictly focuses on interstate rather than international mobility.

The article's emphasis on state-level mark-to-market taxation aims to address the perverse incentives created by realization-based income taxes. The authors use Elon Musk to illustrate their point: Current systems allow wealthy individuals to accumulate significant wealth in high-tax states while paying minimal state income tax. Subsequently, these individuals can relocate to avoid taxation entirely. While acknowledging the primary criticisms of mark-to-market taxation—administrability and valuation challenges—the authors propose solutions including the ULTRA proposal and phased residency rules. However, these designs require careful coordination between of state and federal tax reforms, prompting the questions of why not implement these reforms at the federal level first.       

The article also discusses wealthy individuals' mobility. The authors assert that the majority of the      reported migration is artificial, stemming from tax authorities’ difficulties in determining true residency, part-year residency changes, and fraudulent "paper" relocations. The authors contend that the non-artificial wealthy resident out-migration shouldn't be a primary concern, but also identify "exploitation migration" where taxpayers accumulate wealth in progressive, realization-based tax states before relocating to zero-income-tax jurisdictions. Their proposed policies, including straightforward state-level wealth taxes and phased mark-to-market taxation above high thresholds, mirror discussions about implementing national and global minimum wealth taxes, which inspires readers to consider the same question as before: Why not implement these reforms on a federal level?

Beyond physical mobility, the authors examine "exploitative money moves." Their argument is that while wealthy taxpayers show limited physical mobility, their reported income and wealth demonstrate significant mobility. On this front, the realization principle emerges as a primary factor driving tax-avoidance strategies. The authors express less confidence in straightforward state wealth and mark-to-market taxes' ability to reduce "exploitive money moves" or tax-avoidance mobility, and therefore, they       propose state-specific rules for trusts, pensions, family foundations, and gifts—all common vehicles for state-level tax avoidance. They particularly emphasize the potential impact of reforms targeting the taxation of massive pension and retirement accounts held by the ultra-wealthy, citing examples like Peter Thiel's billion-dollar IRA.

Money Moves is a noteworthy article for a broad audience. For example, readers who consider alternatives to federal-level wealth taxation for various reasons would find a state-level wealth taxation design a comparable, good alternative. By offering customized solutions for people's mobility and capital mobility, respectively, this article illustrates that state-level progressive tax policies can succeed when carefully designed. Although this article turns the focus from federal to state level progressive taxation, it would be interesting to turn the perspective to the international level wealth tax proposal, such as the G20's global minimum wealth tax. For supporters of wealth taxation, a global minimum wealth tax would be ideal. However, takeaways from this paper would imply that even if there is no such global minimum wealth tax, a national wealth tax may serve its purposes well.