California proposes a wealth tax that will follow residents even if they move out of state

[sharenow]

As prosperous Californians continue to flee the state’s onerous taxes, the legislature has sought a way to “eat the rich” even after they’ve moved.

Whether looking at corporate headquarters like Elon Musk’s Tesla or private individuals like podcaster Joe Rogan, red states like Texas have become a haven to escape the oppression of progressivism. Instead of exploring budget cuts as the Golden State faces a $22.5 billion deficit, Assemblyman Alex Lee (D) is one of numerous state legislators across the country attempting to champion a wealth tax.

Introduced Thursday, Lee’s proposal calls for a “worldwide net worth” tax at 1.5 percent for those whose eligible assets amount to more than $1 billion beginning January 2024. Two years later, a new threshold of $50 million would be imposed for a tax at one percent, and an additional 0.5 percent tax would be imposed on those net worths still valued over $1 billion.

As written, were a taxpayer unable to produce the money to pay the tax on these non-liquid assets, they would be forced to continue making annual filings with the state’s Franchise Tax Board until remunerations were made, even if they had relocated away from California.

Lee took to Twitter Friday to boast of his plan and wrote, “The working class has shouldered the tax burden for too long. In CA, we’ve introduced #ACA3 + #AB259 to tax the ultra rich & invest in all Californians. The ultra rich are paying little to nothing by hoarding their wealth through assets. Time to end that.”

In speaking with the Los Angeles Times, Lee claimed “This is how we can keep addressing our budgetary issues. Basically, we could plug the entire hole.”

By his assessment, the new wealth tax that would pertain to 0.1 percent of the population would generate revenue of $21.6 billion.

However, critics like Jared Walczak, the vice president of state projects at Tax Foundation, were quick to point out pitfalls beyond potential constitutional challenges as he told Fox News Digital, “The proposed California wealth tax would be economically destructive, challenging to administer and would drive many wealthy residents — and all their current tax payments — out of state.”

“The bill sets aside as much as $660 million per year just for administrative costs, more than $40,000 per prospective taxpayer, giving an idea of how difficult such a tax would be to administer,” he went on and added, “A wealth tax could be particularly destructive in California, home to so many tech startups, because the owners of promising businesses could be taxed on hundreds of millions of dollars worth of estimated business value that never actually materializes. Very few taxpayers would remit wealth taxes, but many taxpayers would pay the price. The only people who should genuinely love a California wealth tax are the ones who work in Texas’ economic development office.”

As it happens, studies have shown the top one percent of taxpayers are already paying roughly half of state income taxes in places like California, and driving them away would only further diminish future revenue. Despite that reality, progressives have refused to cut spending, and other states introducing wealth tax legislation last week included Connecticut, Hawaii, Illinois, Maryland, Minnesota, New York, and Washington.

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[sharenow]
Kevin Haggerty

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