Separate taxing entities, for one thing. Usually income taxes are Federal, and sometimes state, but property taxes are almost always city/county.
California already has state income tax, so having a wealth tax is definitely double dipping. Plus, if they do that, most people are simply going to claim they live in Texas or somewhere else that doesn’t have that wealth tax.
California already has state income tax, so having a property tax (which is a wealth tax for the lower 99% of people) is double dipping.
Again: we already have an effective wealth tax for everyone but the ultra-rich. If there’s a general argument against taxing the value of assets after already taxing income, why does that argument not apply to the assets of average people, and only to the assets of extremely wealthy people?
I’m not opposed to the idea in concept, but the enforcement question is still unanswered. If a billionaire is going to move out of state, is California going to find some way to freeze or seize his assets in such a way that he can’t transfer them all out of state with him? (to prevent him from taking everything he has to another state and saying ‘nyah nyah you can’t make me pay up in exile’
Isn’t the property tax a wealth tax for 100% of the people? How do the ultra-wealthy avoid paying property taxes?
By having most of their wealth in something other than real property, which is not taxed.
You think taxing things like art, royalties, unsold equities, etc. is going to be helpful?
I think it will be helpful in two ways:
The first is a requirement of a government. The second has lots of generally pro-social benefits.
Say you have a piece of art worth 5,000,000 and you had to pay tax on it every year, what do you think that does to the value of that art? Why would someone want to save money in a 401k or 403b if each year it was taxed at market value? And the simple solution is to move to one of the 49 other states or a US territory.
I do hope California passes such a law so we can see how it plays out.
I think it will reduce the value of that art. Just like, you know, property tax reduces the value of houses. Again: if it’s ok for me (far below the levels of wealth we’re talking about here) to pay an annual tax on my wealth, how come people who can afford to own $5 million paintings get to do so without contributing more to society?
Let’s all observe a moment of silence for the put-upon people with $30 million in assets struggling to save for retirement lest they be forced to eat cat food or sell one of their Monets.
I’m fine with that. I am in favor of wealth taxes and think we should have one at the national level, but I also think that it’s bonkers for CA to try to tax people who aren’t CA residents.
That seems unlikely; other people being rich doesn’t make me worse off.
Many gains never get taxed. E.g. if I inherit a share of XYZ that was purchased at $1 that’s now worth $1000. At least not by the feds – I’ve never lived in CA and am not familiar with the specifics there.
Or if I have them in a Roth account.
That’s not to say they couldn’t be, obviously. Whether that’s optimal policy is a different question.
That seems a lot more like the actual sausage-making of drafting the law than an actual problem with a capital gains tax at the state level.
I also think 30 million is WAY too low. That’s not really that much when you consider that a reasonably prosperous small business might easily have that much plant, property and equipment without actually making anywhere near that much in income. (I’m assuming it’s not just personal wealth here; I can’t imagine California passing on a chance to stick it to businesses).
Assuming this law is found constitutional, would it then mean:
California has authority over me (former resident, moved over 10 years ago) to charge tax on my house in Colorado should they choose to change the law on the time period and get rid of the $30M exemption?
California can tax non-residents (including never residents) on their California wealth?
And the big question, since they would in the hypothetical be allowed to force non (but former)-residents on their assets anywhere in the world, is there an implication that they could charge any person in the world tax on their assets no matter where they are located? Or would you have to have had some link to California no matter how tenuous at some point in your life? What would that link have to be? Resident at one point? Own asset in California? Even if only indirectly like my retirement plan has an ETF that holds Disney stock meaning they can now tax EVERYTHING I own.
Hold it right there. For such a unique piece of art, how do we know the value? Insurance value? Annual apprasal? FTB makes up their own number?
And if you paid a wealth tax on $5M and it only sells for $4M do you get a refund? What if it sells for $7M, do you owe California tax on the difference?
Sure, but again…how? If a rich Californian moves to Texas and takes all his assets with him, how is the Californian government going to force him to continuing pay taxes to CA once he’s in exile? They can’t garnish his wages, they can’t send agents/cops to arrest him; they have no power. Texas certainly wouldn’t extradite him.
How does the US do it because they have a similar system for ex-pats that leave and renounce their citizenship.
Obviously, they enforce it by seizing any assets the taxpayer owns in California. To which the response, I’m sure, would be that the taxpayer would remove all of their assets from California, to which I say, they could try. If you’ve got that much money, you probably have assets all over the place.
Go for it. My Wife and I live on the border of a red county and a blue county. We live just barely in the red county.
We always vote for a raise in taxes to help schools and infrastructure, which all suck in the red county. We have no kids, and don’t travel much in the red county.
The blue county has nice new schools and roads are good.
I’m a gun owner, and own three 4x4’s, but want taxes raised.
We seem to have found a workable system for property that involves a system of certified estimators and a polite fiction that we estimate houses at slightly below their true market value so people don’t complain so much. I don’t see why a system of that can’t be applied to artworks.
In truth, I don’t think California cares that much that art is estimated properly. The true prize for this bill will be equities. If California can tax Mark Zuckerberg on his $100Bn of Facebook Stock for which there is much less ambiguity over the valuation, I don’t think they will care if you value your painting at $4M instead of $5M. It’s not like Zuckerberg has a credible threat of moving away from California, the lost productivity of him trying to manage a company via zoom would far exceed the trivial $400M that he would get taxed. After all, a minor swing in the Facebook stock price can far exceed a difference of $400M in his net worth.
You would move because the thought of you having to pay $40,000 extra every year out of your gigantic $40M net worth would be too much to bear?
Or $280K out of your $100M worth of assets?
Or the much more likely absolutely zero because I’m almost certain you don’t have $30M in net worth?