The bill would impose a tax of 0.4% of a state resident’s worldwide net worth in excess of $30 million, or in excess of $15 million for married taxpayers filing separately.
A not surprising tax considering California’s current financial situation. The eyebrow raising part however.
Section 50310 also provides special apportionment rules for the wealth tax. Basically, the “the portion of a taxpayer’s wealth subject to the tax imposed by this part shall be multiplied by a fraction, the numerator of which shall be years of residence in California over the 10 last years, and the denominator of which shall be 10.”
Basically saying that if I had been a resident of CA with a value of a hundred million and permanently moved to another state in 2015, they’re going to come looking for me to cut them a check for the .4% of half that value ($200,000). Even though I’ve been living, voting, paying state income taxes here in AR for the past 5 years.
The IMHO part of this. Is there any possible way this is going to survive the inevitable court challenge?
I read it the same way, Munch. Given the obvious constitutional failings if the law affects previous behavior, I think that’s the correct reading: if you moved TO California in 2015 and the tax is enacted tomorrow, you’re only responsible for paying half of the tax during its first year.
Thirding this interpretation. However, I do wonder if your point about the “not California taxpayers” would apply to people who used to live and work in California but moved to a nearby state within the past decade while retaining their California-based job. California does extract income taxes from non-residents who work in the state, right?
I sympathize completely. Reading legalese makes me cross eyed after about 2 paragraphs which explains me maybe misinterpreting the application of the proposed legislation.
I’m also wondering if this is an ongoing annual tax or just a one-shot to boost their coffers. If it’s a permanent tax like I think it is I can see a renewed exodus which will ultimately put them in a worse position than they’re in now.
Why would Cali be “one to flee”? Who says so? We do tend to have higher taxes than many states. That’s part of the reason it’s so nice to live here. On the continuum from backwards to civilized we’re well ahead of Somalia and Missisippi but not yet up to Norway and Iceland.
Reading the linked article, this seems pretty clear.
The intent is that this would be an annual wealth tax on taxpaying residents. The wealth tax would be assessed, reported, and paid at the same time as annual state income taxes. It would specifically apply to taxpaying residents with a net worth in excess of $30 million ($15 for married taxpayers filing separately). There are also a bunch of other qualifications about how to calculate “wealth” subject to this tax.
It would not apply retroactively to former residents, nor would it apply to non-resident taxpayers. If you are a California resident at the time you file your taxes and have a net worth, as defined by the law, in excess of $30 million, you would be subject to the tax. If you have been a resident for less than 10 years at the time you file, you would be subject to a pro-rated wealth tax.
It is also apparently only an Assembly Bill - it’s been proposed in one house. Under California law, it would require a 2/3 majority vote in both houses and the governor’s approval to be enacted, and there’s no indication in the linked article of how much, if any, support this bill actually has in the legislature beyond it’s drafters.
One of the reasons is retirement. Many California retirees move out of state, partly for the lower taxes and partly because the equity in their house is huge compared to property costs in other states. There’s been some tracking of emigrating retirees and they tend to go to the same areas that other retirees from their department have already gone, creating a colonial effect. In the 1950s, folks in Oregon referred to it as Californication.
Who’s responsible for assessing the amount of wealth there is, and under what standards? Is real property excluded from this assessment, as property owners already pay a property tax.? Does one have to hire an independent appraisal firm to value your business holdings or can the individual estimate the value? Does the tax apply to the wealth of California residents that is in another state, e.g. oil producing assets in Texas, or a chain of hotels across the midwest?
I Am Not A Lawyer. I Am Also Not A Tax Accountant. I Am Also Not A California State Legislator. I just read the article linked in the OP.
Per that article, “wealth” is “worldwide net worth based upon reference to federal tax law” and is self-reported. It includes mandatory reporting requirements on assets including but not limited to 18 asset categories. It also directs the California Franchise Tax Board to formulate regulations to implement the tax, prevent evasion, and clarify valuation methods.
Again, I Am Not An Expert on any of this, I’m just The Guy That Actually Read the Linked Article.