California wants to tax the assets of those in California at 0.4% with a worth of $30M or more. What’s wrong with taxing the rich? Maybe a few things.
The Legislative summary states “The tax takes into account all assets and liabilities held by an individual, globally, capturing the immense levels of accumulated wealth held by the top 0.1% of Californians.” So you are taxed on wealth held outside of California. And that is independent of income. If you have $30M in worldwide assets including but not limited to
(1) Stock in any publicly and privately traded C-corporation.
(2) Stock in any S-corporation.
(3) Interests in any partnership.
(4) Interests in any private equity or hedge fund.
(5) Interests in any other noncorporate businesses.
(6) Bonds and interest-bearing savings accounts.
(7) Cash and deposits.
(8) Farm assets.
(9) Interest in mutual funds or index funds.
(10) Put and call options.
(11) Futures contracts.
(12) Art and collectibles.
(13) Financial assets held offshore.
(14) Pension funds.
(15) Other assets, excluding real property.
(16) Debts other than mortgages or other liabilities secured by real property.
(17) Real property.
(18) Mortgages and other liabilities secured by real property.
You are responsible for $120,000 more in taxes whether or not you made it as income.
California taxation is already making the wealthy leave in droves. But California has a solution for that.
No problem. The super-rich may leave California, but California won’t leave them. In year one of their exile, they’ll still pay 90 percent of the 0.4 percent wealth tax. In year two: 80 percent. Year three: 70 percent. It will take a decade before the long arm of California’s Franchise Tax Board lets go. And then of course if in any one of those years a wealthy exile might venture back into the Golden State for more than 60 days, tack that onto whatever else is owed.
I imagine Justice Thomas is drooling declaring that unconstitutional under the Privileges and Immunities Clause.
Hmmm drive out those that pay the taxes (I’ve heard the top 1% of Californians pay 46% of the state income tax and that is in addition to business taxes), that’s a good plan. Oh and there are probably a lot of reasons this law will be thrown out on constitutional ground because I’m pretty sure this will pass in California. What are all of your thoughts?
In the previous thread, it was pointed out that this is an inaccurate summary. California can’t tax previous residents. The 10-year prorating is for people to move to California.
I am generally in favor of wealth taxes and enjoy pointing out that everyone other than the ultra-rich are already taxed effectively on their wealth, as the value of real estate is a very effective proxy for assets for everyone in the lower 99% and real estate is pretty universally taxed based on its value. It’s only the super rich who aren’t already taxed on the value of their assets.
Ackshually…Take another look at that thread. I read the bill that way myself, and stated so in that thread, but then watched this interview:
It’s an interview with the Assemblymember who introduced the bill. He pretty clearly seems to indicate that the intent is in fact to continue taxing former California residents for up to 10 years (at a pro-rated, diminishing rate) even after they leave California.
(A) For taxpayers who were subject to the Wealth Tax in one of the preceding 10 years, and are no longer residents of this state as residence is defined in Section 50310, and do not have the reasonable expectation to return to this state, the calculation of the numerator under paragraph (1) shall be as follows. For the first year of nonresidence in California, a fraction between 0 and 1, as calculated under subdivision (b) of Section 50310, plus the years of residence in California over the nine previous years shall be the numerator. For each subsequent year, the number 1 should be subtracted until the numerator reaches 0.
So pretty clear they will tax non-residents
Oh and mods can we merge this with the previous thread?
I’m pretty sure the ‘previous ten years’ clause is there to make a last grasp at everyone who will be moving out of state as a result of the tax. Bleeding the golden goose as long as they can.
If a billionaire moves from California to Florida, and refuses to pay CA taxes in exile, how is California going to seize his income? (assuming he left no assets behind in California)
I’ve ignored this nonsense. I think it’s nothing but test cases for the courts. And with Warren getting destroyed in the primaries, there’s no federal wealth tax coming.
This last time this bill was brought up on the 'Dope, there didn’t seem to be any reporting indicating that literally any legislators other than Assemblyman Bonta actually supported this bill. Has that changed? Does anyone have up to date info on how much support this bill actually has in the California Assembly?
It lists 9 Assembly members as introducing it with 2 more and 3 Senators as co-authors and it is currently in committee so not killed yet and looks like it will reach the floor…
Ok, assuming a straight party line vote. I’m definitely not an expert on California politics, but I’m doubtful a proposal like this would be supported by an overwhelming majority of Democratic legislators. But, I guess we’ll see.
There’s no way that’ll actually work out in the real world. No state is going to extradite their citizens to another state for failing to pay taxes in that other state years after they lived there.
Also, I think a wealth tax is kind of terrible. At some point they were presumably already taxed on the income that became wealth, so why tax it again, just because someone accumulated a lot? If they weren’t taxed, then California needs to implement a state level capital gains tax, not a wealth tax.
Same argument for property taxes, right? I was taxed on the income I used to buy my house, why am I taxed annually for my wealth but the super rich aren’t?
