Remember when she told people with money to get out and go to Florida? They did, and now ...

FastLane said:
How does that work for them?
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Asked Grok.

Blue states' retroactive (or effectively retroactive) taxation efforts in 2025–2026 have produced mixed results: short-term revenue gains in implemented cases like Maryland, ongoing legal battles in California, and broader decoupling from federal tax relief, but with notable risks of high-earner migration and court pushback.

These efforts typically involve mid-year or surprise budget changes that apply higher income/capital gains rates, base-broadening (e.g., GILTI inclusions or apportionment tweaks), or non-conformity to federal tax cuts retroactively to January 1 of the current or prior year.

They target high earners, corporations, and new federal deductions (tips/overtime under the 2025 One Big Beautiful Bill Act/OBBBA). Proponents cite budget deficits; critics highlight due-process issues with retroactivity and economic flight.

Maryland (Implemented Successfully for Revenue)Maryland's 2025 Budget Reconciliation and Financing Act raised personal income tax brackets retroactively to January 1, 2025: 6.25% on income over $500,000/$600,000 (joint) and 6.5% over $1 million/$1.2 million. It also added a 2% capital gains surtax for federal AGI over $350,000 (doubling a prior 1% version in some contexts).

This was part of a package (including sales tax expansions) projected to raise over $1 billion in FY2026, with the capital gains surcharge alone estimated at ~$367–370 million to help close a $3+ billion deficit. As of early 2026, it appears in effect with revenues tracking upward (though future gaps remain projected). Penalties for underpayment were waived in some cases. No major successful legal challenges reported yet.

Illinois FY2026 budget (signed June 2025) newly taxes 50% of Global Intangible Low-Taxed Income (GILTI) for corporations (tax years ending after December 31, 2025) and made other apportionment/sourcing changes. This acts as a retroactive base expansion for ongoing activities.

California (Corporate Retroactive Rules Litigated; Wealth Tax Proposed)
  • SB 167 (corporate apportionment): Enacted 2024 but with retroactive elements redefining "receipts" for business income apportionment (potentially applying back years or decades). Challenged by groups like National Taxpayers Union and California Taxpayers Association on constitutional grounds (due process, retroactivity). Florida filed an interstate suit in 2025. Cases are ongoing with appeals into 2026; some procedural rulings favored the state, but core challenges persist.
  • 2026 Billionaire Tax Act (ballot initiative): Proposed one-time 5% net-worth tax on billionaires resident in California as of January 1, 2026 (payable over years; qualifies for November 2026 ballot if signatures met—~25% gathered by early 2026). Not yet law, but its residency snapshot has already triggered preemptive exits by high-profile figures (e.g., Larry Page, Sergey Brin, Peter Thiel, others). Estimates suggest hundreds of billions in wealth/income tax base potentially lost before enactment; studies project net fiscal loss after erosion
 
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