The pandemic has inflicted a $50 billion dent on the economy of California, and Democrats are doing everything they can to find new ways of collecting more tax revenue. Plans to impose a tax hike on those who make more than $1 million have recently been delayed until next year, but a California Assemblyman has now suggested a wealth tax on top earners.
California proposed a .4% annual wealth tax that applies to former residents who already left within the past 10 years, and to current residents for ten years after they leave. The rate is reduced by 10% for each year of absence. Any wealthy person who moves into Cal. is nuts.
— Peter Schiff (@PeterSchiff) August 15, 2020
Wealth tax would be imposed even 10 years after you leave
And it begins. Taxing your “excessive savings.” They’ll start at a ridiculously high number then start working down. The frugal will be taxed to support the extravagant. JG
California lawmakers propose a first-in-the-nation state wealth tax https://t.co/XoruHcz9sQ
— Armstrong and Getty (@AandGShow) August 13, 2020
As noted by SF Chronicle:
A group of state lawmakers on Thursday proposed a first-in-the-nation state wealth tax that would hit about 30,400 California residents and raise an estimated $7.5 billion for the general fund.
The tax rate would be 0.4% of net worth, excluding directly held real estate, that exceeds $30 million for single and joint filers and $15 million for married filing separately.
California is facing a big budget deficit because of the health and economic crisis brought on by the coronavirus, and “we can’t simply rely on austerity measures,” to close it, said Rob Bonta, D-Oakland, lead author of AB2088. “We must consider revenue generation.”…
People subject to the wealth tax would report it to the Franchise Tax Board along with their income taxes. They would have to report all assets including stock in publicly and privately traded corporations; interests in partnerships, private equity or hedge funds; cash, bonds and savings accounts; mutual funds, futures and options; art and collectibles; offshore financial assets, pension funds, non-mortgage debt, real property and mortgage debt.
Proposed tax does not count property
Fortunately, property wouldn’t be counted as part of overall wealth because property taxes already covers it, but they do have to report it. Emmanuel Saez, the UC Berkeley economist, co-wrote a report on the proposed levy. Therein, he clarifies that the rich will not be able to exit the state to get out of it because, even if someone leaves the state, the wealth tax will continue for ten years.