When SpaceX, Elon Musk’s rocket and artificial intelligence company, began trading on the stock market last week, he became the world’s first trillionaire.

The SpaceX IPO made the world’s richest man even richer, grabbing headlines worldwide. But it is merely the most vivid illustration of a U.S. trend that has been accelerating since 2022.

The richest 1% of Americans held nearly a third of the country’s total wealth at the end of 2025, the largest percentage the Federal Reserve Board has recorded since it started monitoring the numbers in 1989. In 1990, the share was 22.5%.

The latest percentage, 31.9%, is likely the largest since the end of World War II, possibly heralding a return to the extreme wealth inequality of the late 19th and early 20th centuries. And it is likely to balloon further as a result of President Donald Trump’s tax cuts and other pro-business policies.

Today’s top 1% consists of about 1.4 million households with at least $12 million in net worth, holding a total of $55.9 trillion in wealth. The bottom 50% consists of 67.7 million households with less than $264,000 in net worth.

Using different methods than the Fed, French economist Thomas Piketty has asserted that the richest 1% of Americans held nearly half the nation’s wealth in 1928 and 1929, just before the Great Depression. Their share declined after that, during a period of high marginal income tax rates (the percentage of tax you pay on your last dollar of income) and widespread discomfort with astronomical pay for executives. Instead, corporations plowed their profits into expansion and higher wages for workers.

But the share of wealth held by the top 1% began rising again in the 1970s, according to the Piketty data.

Piketty, who theorizes that unfettered capitalism always leads to high concentration of wealth, told Stateline in an email that “there’s nothing natural about this — it’s all due to policies.”

“If the super-rich capture the state and pay little tax, then it’s easy to accumulate a lot, but history suggests that politics can revert quite quickly,” Piketty wrote.

Another prominent economist who recently studied the wealth of California billionaires, Emmanuel Saez, described the current spike in the share of wealth held by the top 1% as driven primarily by the stock market boom. Saez is director of the Stone Center on Wealth and Income Inequality at the University of California, Berkeley.

New taxes proposed

In at least a dozen states, including Illinois, Minnesota, Rhode Island and Virginia, lawmakers have proposed new taxes for the wealthiest taxpayers. Some of the proposals would tax annual incomes above a certain threshold while others would tax capital assets, including high-value stocks and real estate.

In California, advocates in April announced they had gathered enough signatures for a November ballot initiative that would impose a one-time tax on billionaires. The state’s billionaires held about $2.3 trillion in wealth as of June 10, assets that could generate almost $101 billion from the proposed tax.

This year, at least 12 billionaires left California. They include Lynsi Snider, who inherited the In-N-Out hamburger chain and moved to Tennessee, and car loan magnate Don Hankey, who moved to Nevada. However, moves into the state and new wealth created 23 new California billionaires this year. NVIDIA CEO Jensen Huang has vowed to stay in California despite a potential $8 billion one-time tax bill.

There are no state-level statistics on the top 1%, though Census Bureau estimates from 2022 show the states with the highest shares of households with more than $500,000 in net worth are Hawaii (48%), the District of Columbia (47%) and Washington state (43%). Hawaii also has the highest average net worth at more than $1 million, mostly because homeowners in that state have an average of $600,000 of equity in their homes. The states with the next highest average net worth are California ($792,000), and Massachusetts ($751,000).

Conservative and liberal experts agree that a soaring stock market and business profits have made it a good time for the wealthy, while middle-class and lower-income people are doing less well, especially as inflation gobbles up wage increases. There’s also widespread agreement that Trump’s tariffs (since struck down by the U.S. Supreme Court) disproportionately harmed lower-income and middle-class people, and that the tax cuts in the broad tax and spending measure Trump signed last summer (commonly known as the One Big Beautiful Bill Act) will disproportionately benefit the wealthy.

The combined effects of the tariffs and the tax and spending law will help households with the top 10% of incomes most and hurt 70% of households between now and 2034, according to a June 1 report from the Center on Budget and Policy Priorities, a left-leaning think tank that drew on information from the Budget Lab at Yale University.

Chuck Marr, the center’s vice president for federal tax policy, pointed to the law’s extension of  a deep corporate income tax cut that dates from Trump’s first administration.

“Trump’s whole policy has really leaned into increasing this disparity,” Marr said. “You’ve got AI coming and globalization has shifted income and wealth upward, and instead of pushing back against that, Trump and others have leaned into it.”

Nevertheless, Kyle Pomerleau, a senior fellow at the conservative American Enterprise Institute, said the U.S. government’s tax and spending policy is “still highly progressive in that low-income households receive benefits from the high-income households paying taxes.”

“It’s a little less so than it was prior to the passage of the (Trump tax and spending law) and the tariffs, but it’s still the case. It hasn’t changed the story that much,” Pomerleau said.

Marr agreed that the federal tax system is basically progressive, in that it uses taxes on high income earners to pay for the needs of low-income residents. But tax collections are low in the United States compared with other wealthy countries: Of the 20 wealthiest nations, only Ireland collects less government revenue as a share of GDP.

“Compared to other countries, inequality is high because we redistribute so much less money,” Marr said. “It’s a progressive tax system but it doesn’t raise a lot of money.”

Inflation divide

The Federal Reserve’s Beige Book, an accounting of national economic conditions released June 3, found a divide in how inflation, which has increased as a result of the war in Iran, has affected American spending.

“Higher-income households remained resilient and less sensitive to price increase, while middle-income households were described as ‘squeezing more life out of every dollar before deciding to spend it,’ and low-income consumers showed greater financial strain,” the report said.

The “squeezing” analogy for the middle class came from a roundtable discussion of hospitality executives in the Kansas City, Missouri, area in late May, said Jeremy Hill, a regional economist for the Federal Reserve Bank of Kansas City.

Hill said there was a gasp in the room when one high-end restaurant chain executive said the chain could raise prices at will and keep expanding, hampered only by a shortage of high-end chefs to staff locations. Meanwhile, hotels, bars and restaurants serving the middle class are struggling to get people to come in and spend.

“It’s not that they (wealthy people) don’t care about inflation. They’re worried about what it might do to future demand or their own stocks,” Hill said. “But today, it’s not impacting the way they spend.”

The stock market’s recent run has contributed the most to the consolidation of wealth at the top. Rising real estate prices also have also added to wealth, especially for longtime homeowners.

“This has disproportionately helped those who already hold assets while the average American pays higher prices for everyday essentials,” said E.J. Antoni, chief economist for the conservative Heritage Foundation. “In other words, Wall Street got rich while Main Street got inflation.”

White Americans own outsized shares of assets such as stock and real estate, according to the federal statistics. White people are 57% of the population but own 82% of the assets, while Black and Hispanic people, who make up a combined 24% of the U.S. population, have less than 7% of assets. Asians are included in an “Other” category, which is about 9% of population and holds about  11.3% of the nation’s total assets.

By generation, Baby Boomers born between 1946 and 1964 hold almost half of wealth, while Millennials and Gen X hold the lion’s share of liabilities, such as mortgages and consumer debt, that detract from net worth. Millennials (born between 1981 and 1996) have about 42% of liabilities and Gen X (1965-1980) have 35%, compared with 22% for Baby Boomers.

It’s not necessarily a bad thing for young people to be in debt as they build careers and pay off student loans, said Pomerleau, the American Enterprise Institute economist.

“Doctors with $450,000 in medical school debt might be in the bottom 10%, yes, but that person is going to be in the top 1% of wealth at some point in their lives,” Pomerleau said.

“You enter the labor force with a net liability, but you save over time, that liability is paid down, you’re paying off your mortgage, and that’s when your wealth starts growing.”

Stateline reporter Tim Henderson can be reached at thenderson@stateline.org.

While the idea of a special tax on millionaires is hotly debated across the country, Maine state Rep. Cheryl Golek characterized her state’s new tax as a modest and reasonable step toward fairness.

That’s because, she said, working- and middle-class households in Maine — including teachers, firefighters and nurses — are paying effective state income tax rates similar to or higher than those of the highest earners.

“Those who benefit the most from our economy do so because of the people, infrastructure and communities that support that success,” said Golek, a Democrat. “Asking for a small additional contribution from the wealthiest in our state is a reasonable and widely supported step toward a fairer system.”

The legislation signed by Democratic Gov. Janet Mills this month will add a 2% tax to households whose income exceeds $1 million per year.

Maine and Washington, which enacted its own law last month, are among the latest Democratic-led states to ask for more tax dollars from the rich as national wealth inequality widens and states face heightened budget pressures. They follow the lead of other states including New Jersey and Massachusetts that have implemented specific taxes for the rich.

The idea is gaining traction as lawmakers in at least a dozen states, including Illinois, Minnesota, Rhode Island and Virginia, have proposed new taxes for the wealthiest taxpayers. In California, advocates this week announced they gathered enough signatures for a ballot initiative that would impose a one-time tax on billionaires. But these proposals often stir yearslong battles.

The taxes can take different forms — taxing annual incomes above a certain threshold or taxing capital assets, including high-value stocks and real estate. Earlier this month, New York Mayor Zohran Mamdani and Gov. Kathy Hochul, both Democrats, proposed a new pied-à-terre tax for homes valued above $5 million when owners have a separate primary residence outside of New York City.

In neighboring New Jersey, those earning over $1 million per year face an income tax top rate of 10.75% in addition to a so-called mansion tax on the sales of high-value homes.

Proponents say these moves can help balance state tax structures that are tilted against lower earners. The left-leaning Institute on Taxation and Economic Policy says the tax systems of 40 states favor the wealthiest earners. But opponents argue that these measures levy new taxes on business owners, dissuading local investment and encouraging rich residents to move away — especially risky during a time when many other states are slashing taxes.

“When the outlook of our population growth is stagnant and we should be attracting people to Maine, it puts a disincentive to people to call Maine home,” Patrick Woodcock, president and CEO of the Maine State Chamber of Commerce, said during a news conference ahead of the state House vote on the tax.

The rising push to tax the wealthy in liberal states comes as some red states are moving to more regressive tax systems, which put a higher burden on lower earners.

“You increasingly have two poles where you have a larger number of states with fairly low income taxes and a smaller but still significant number of states that have doubled down on high rates, particularly high rates on high earners,” said Jared Walczak, senior fellow at the conservative-leaning Tax Foundation.

He said increasing income taxes pushes wealthy people and employers to low-tax states. Even if individuals don’t directly move because of taxes, they follow businesses to other states, he said.

And some progressives are wary of going too far: California Democratic Gov. Gavin Newsom is opposing the ballot initiative that would impose a one-time 5% tax on those whose net worth exceeds $1 billion. Hochul, who pushed for the new tax on second homes in New York City, has warned that more tax increases on the millionaires and billionaires could hollow out a crucial portion of the state’s tax base.

Walczak said only a handful of in-demand places can afford to impose higher taxes for the same reason that people pay higher rents.

“It’s worth it to a lot of people,” he said. “People are willing to pay very high rent, but there’s a limit. In the same way, they’re willing to pay higher taxes to live in New York, but there is a limit.”

Rising wealth inequality

The gap between the rich and poor has been widening for decades.

Wealth for the bottom fifth of American households has barely moved in recent decades, while the top 0.1% have seen their wealth increase by nearly $40 million each, according to an analysis by the anti-poverty nonprofit Oxfam America.

Between 1980 and 2022, the share of national income going to the top 1% doubled, while the share going to the bottom 50% fell by a third, Oxfam reported.

Recent federal policy changes have only exacerbated the need for progressive state tax changes, said Amber Wallin, executive director of the State Revenue Alliance, which is lobbying for higher taxes for the wealthy across multiple states.

President Donald Trump’s major tax and spending bill, often called the One Big Beautiful Bill Act, slashed funds for safety net programs including food stamps and Medicaid. At the same time, it provided tax cuts that largely benefit the wealthy.

“So we know millions will lose access to healthcare, millions will lose food assistance, and states all across the country will see funding cuts for key programs,” she said. “We know that people power a strong economy, not tax cuts for the wealthy, and when the rich pay their fair share of taxes, we all benefit.”

Since Massachusetts voters in 2022 approved a 4% surtax on annual incomes above $1 million, that Fair Share Amendment has provided the commonwealth with $6 billion in transportation and education funding.

But Jim Stergios, executive director at the libertarian-leaning Pioneer Institute, said it’s not just the ultra-wealthy who are paying that tax. People who record a one-time sale of a business or a home can face the tax even if they’re not earning over $1 million every year, he said.

He said the tax is pushing residents out of the state and dampening business investment. Federal data from the U.S. Census Bureau shows Massachusetts lost more than 33,000 residents to other states last year, though Democratic Gov. Maura Healy noted the overall population did increase because of foreign immigration. Stergios noted lawmakers are still facing challenges balancing the state budget even with the new revenue.

“So over the long term, it’s not going to have a salutary effect,” he said. “We’re going to continue to have budget problems. We do have budget problems even with this.”

Proponents and opponents of the state’s millionaire’s tax have touted recent IRS data in their arguments: Residents leaving Massachusetts took a total of $4.2 billion in adjusted gross income with them in 2023, the first year of the new tax, Bloomberg reported. Yet the number of residents moving out of Massachusetts who reported income of $200,000 or more fell after the tax was implemented.

“There’s no real evidence of millionaire out-migration. I’m sure there’s some isolated anecdotes, but the actual data don’t show it,” said Phineas Baxandall, director of research and policy analysis at the left-leaning Massachusetts Budget and Policy Center.

He said one piece of evidence that the wealthy remain in Massachusetts are the proceeds of the tax itself, which are funding major priorities including free community college and expanding childcare subsidies for thousands.

“Massachusetts is rightfully fearful of the federal cuts that are happening,” Baxandall said, “but we’ve been able to still move forward with real, transformational investments.”

Multiyear efforts

Though interest in raising taxes on the rich is growing across the country, the idea faces considerable skepticism and often requires years of organizing.

In March, Michigan advocates announced they would suspend their campaign to put on the statewide ballot a 5% tax on individual incomes over $500,000 and joint incomes over $1 million.

“We always knew that we were going to face strong headwinds from billionaires who don’t want to pay their fair share,” Rachelle Crow-Hercher, president of the Invest in MI Kids steering committee, said in a statement to Michigan Advance. That coalition plans to eye the 2028 election cycle instead, she said.

Last week, Illinois House Speaker Emanuel “Chris” Welch announced he would drop a push for a new millionaire’s tax as Democrats came up short of the necessary supermajority needed to put the issue on this fall’s ballot.

Welch believes the issue will come before lawmakers again, but after missing a key legislative deadline it won’t be eligible for a statewide vote until 2028. He said it remains popular among voters. Lawmakers proposed using proceeds of a new tax for schools and property tax relief.

“I believe that we should tax the rich and the rich should pay more,” he said. “To those who much is given, much is required.”

Meanwhile, the newly enacted Washington tax faces a lengthy, though expected, court challenge.

The legislation signed last month by Democratic Gov. Bob Ferguson imposes a 9.9% tax on household income above $1 million a year. Opponents argue that income is property and thus must be taxed uniformly because of state constitutional requirements.

In addition to the constitutional concerns, Republican state Rep. Jim Walsh said the new law opens the door for lawmakers to eventually expand income taxes to more households — not just the rich. Instead of raising revenue, he said Democratic lawmakers should focus on cutting spending, noting the state operations budget has more than doubled in the past decade.

“The problem is not the financing mechanism of the state’s operations,” he said. “It’s the rate at which far-left advocates in the legislature have been increasing state government spending in the state. It’s ridiculous.”

To Democratic state Sen. Noel Frame, the legislation brings the state’s regressive tax code more in line with Washington’s progressive politics. With no statewide income tax, sales and property taxes leave lower income earners to cover more of the cost of state services, making Washington’s one of the nation’s most regressive tax systems.

“For all the things that we do that are good, big, bold economic policy — to have the tax code that we have is just an embarrassment, and it’s completely out of line with our values as a state,” Frame said.

Like the push for a $15 minimum wage started in liberal cities and states, Frame expects the millionaire tax movement will spread into more conservative areas.

Already, some conservative states, including Idaho, Indiana and Florida, have made moves to reject some of last year’s federal tax changes that benefit corporations and the wealthy.

“The people are demanding better,” Frame said. “And the more that people understand the deep connection of tax policy to income and wealth inequality, the more engaged they become.”

Stateline reporter Kevin Hardy can be reached at khardy@stateline.org.