California Continually Tries to Chase Away the Wealthy

Mish

The California legislature proposes scheme after scheme to tax the wealthy.

You Can Check Out But Never Leave

California's proposed wealth tax, Bill 2028, would apply for a decade to anyone who spends 60 days in the state in a single year.

Here are the details.

  • A 0.4% tax on residents with a worldwide net worth in excess of $30,000,000 ($15,000,000 for a married taxpayer filing separately). 
  • The proposed tax would apply to residents, part-year residents, and temporary residents.
  • Temporary residents are defined as those who stay in the state more than 60 days during the calendar year. For part-year and temporary residents, the tax would apply proportionally based on the number of days they are in the state during the year.  
  • 10-year lookback provision : The portion of a taxpayer’s wealth subject to the wealth tax is multiplied by a fraction, the numerator of which shall be years in residence in California over the 10 preceding years with 10 years being the denominator.  

Assets Subject to Taxation

Stocks, options, bonds, cash, farms, in short, everything is covered including unrealized gains.

The Wall Street Journal comments on A California Plan to Chase Away the Rich, Then Keep Stalking Them.

California’s Legislature is considering a wealth tax on residents, part-year residents, and any person who spends more than 60 days inside the state’s borders in a single year. Even those who move out of state would continue to be subject to the tax for a decade—a provision that calls to mind the Eagles’ famous “Hotel California” lyric: “You can check out any time you like, but you can never leave.”

The WSJ article came out on December 18, but my understanding is that bill had already died by that date.

However, economic nonsense never stops.

Deja Vu: Another Wealth Tax Bill Introduced 

The California Globe reports Another Wealth Tax Bill Introduced in Assembly.

A new bill was introduced in the Assembly this week that would simultaneously increase corporate taxes, raise income taxes on citizens making over $1 million a year, and eliminate corporate tax “loopholes.”

Assembly Bill 71, jointly authored by Assembly members Luz Rivas (D-Arleta) and David Chiu (D-San Francisco), aims to create a homelessness solutions fund dubbed the “Bring California Home Fund. 

To fund the program with at least $2.4 million, AB 71 would specifically increase the corporate income tax to historical high rates to create a more “progressive” corporate income tax, would increase the personal income tax for anyone in California making more than $1 million, eliminate or limit corporate tax loopholes including the water’s edge election, and would “mark to market” unrealized capital gains and repeal step-up in basis inherited assets, raising the amount generated from capitol gains.

“It’s absolutely crazy,” Los Angeles-based financial consultant Richard Ritz told the Globe. “We’ve been seeing wealthier people leave the state for years because of high taxes, including, most recently, Elon Musk. Especially the Bay Area.”

“A lot of wealthy people had that wealth tax proposal earlier this year as the trigger to move, and now many who stayed after it was defeated are looking at this one for being a trigger.”

"Bring California Home Fund"

What a hoot. 

These ridiculous schemes will do nothing but drive the wealthy taxpayers away. 

AB 71 is modest in comparison to Bill 2028 but rest assured it would not stop there. 

Progressive madness never stops. 

A wealth tax may be legal at the state level, but it would never pass a constitutional test in the Supreme Court on those who left. 

And yes, the wealthy would leave. So would more corporations.

Leave Now

  1. Elon Musk Leaves California: As Tech Flees Silicon Valley, Rents Plunge
  2. New York: Flee New York If You Can
  3. Illinois: Escape Illinois: Get The Hell Out Now, We Are
  4. Illinois: It Takes 3 Weeks to Escape Illinois

Those are the proper responses to tax madness.

Mish

Comments (60)
No. 1-17
njbr
njbr

Banks are robbed because that's where the money is.

This is the other end of Mitch Romney's 47%

Eddie_T
Eddie_T

Can you imagine what it was like in this country in the days before the personal income tax? It was introduced as a temporary measure, sold to the citizens as a way to pay for WWI.

Hell, we were only in WWI for 17 months.

oee
oee

It looks like you do not follow the numbers :
1 CA has a higher per capita income than TX
2. CA has a lower uninsured rate that TX
3. TX & FLA (your other paradise) have more cases of Covid 19 and deaths per capita than CA
4 Rightwingers ruined CA by introducing Proposition 13. you had free riders people coming to CA without being charged the price of govt. that will happen with TX & FLA . govt will not be able to provide the necessary services for those new residents and existing residents.
5 CA has become a whipping boy for the rightwingers ever since Dems assumed control. When the Rethugs had control it was paradise on earth.
6. Population movements-people can move where ever they want to move. However, FLA & TX will become uninhabitable by the turn of the 22nd century due to Global Warming. therefore, the ancestors will be moving to the Midwest to escape sea level rise.
In fact , Southern FLA will be swallowed by the Atlantic Ocean.
7. All the billionaires & millionaires that are arriving in those two states are not curing 1; 2; nor 3.

Anda
Anda

They are just redistributing the wealth... to the rest of the US... I suppose. There is a saying, about when the emperor wants to draw people around him he gives out money, and when he wants them to go away he tries to take it back.

Dodge Demon
Dodge Demon

Don’t they know how to hide their assets and income in off-shore shell LLC companies?

PecuniaNonOlet
PecuniaNonOlet

No one likes to pay taxes but then everyone demands social services (roads, fire, police, etc).

Taxes are one dimension of living. I've asked Californians why they stay there and the answer is often the ability to be in the sea or mountains within a couple of hours drive.
People (high energy, creative, diverse), Culture (food, wine, music, sports, etc), Opportunities (jobs, growth, airport accessibility, etc). The ultra rich will stay as the tax is a rounding error, the poor will stay because they get subsidized. It is the middle class that gets squeezed and squeezed.

I'd love to live in Cali but the housing prices are the primary reason I stay away.

What is the end goal here? Everyone leaves California, New York and Illinois and moves to Utah, Texas and Florida? Wouldn't that just turn those states deep blue? Wouldn't the problem just get recreated?

If taxes and big government are anyone's main concerns, Somalia is virtually government free and tax free.

amigator
amigator

I love it. Raising taxes always works....Where are all the Hollywood people. They have plenty to contribute. I say a film Tax is due to support all the causes they seem to want US to pay for....

njbr
njbr

Mr Johnson has been warned to impose a full national lockdown in England - or risk "human disaster", claims the Guardian. It says scientists have told the PM he must extend harsh restrictions beyond the south and east of England to keep out the fast-spreading new virus variant.

Sechel
Sechel

California clearly loses residents each year to less restrictive states but many gladly stay. Same occurs in New York. I wouldn't mind spending a month or two in California each year. Some amazing geography and climate. Would take it over Florida in a heart beat

Johnson1
Johnson1

So Ukraine is getting $430 million in the stimulus. I am guessing other countries are too.

What about people in the U.S. My church, through donations, provides 1800 kids weekly meals. 10 years ago it was just a couple hundred kids.

How about looking after our own citizens.

I also read family members of unauthorized immigrants are now eligible to get stimulus checks. Will this include the family members living in another country? How do we no if they are unauthorized or undocumented?

I have some relatives that are about to be kicked out of their apartment and are struggling who are actual citizens.

Corvinus
Corvinus

I'm surprised no one has blamed Trump for something in this thread yet.

PT109
PT109

California's idiotic politicians who no brains can F themselves.

Casual_Observer
Casual_Observer

I will go out on a limb and predict Newsom gets recalled. Even moderate Democrats have had it with the Democratic party in California. I hope Faulconer runs for governor. He stands a great chance at winning because he has taken the middle ground away from the nutty Democrats out here.

Johnson1
Johnson1

So Wuhan has not had one COVID case since May 10. In this article, it looks like hardy anyone wears a masks anymore?

bobmaginnis
bobmaginnis

For those with more than $30 million, $10,000 per month tax while living in California is nothing.

BobMcG
BobMcG

The problem in California, like the problem in many of these "blue" states is that they fail to address the size and scope of their commitments to public sector unions. It's a cycle. The unions produce the cash for election campaigns. They elect the politicians who continue to grow the size and scope of government with more government union workers and hand them increased benefits and pay which then produces more election campaign money which then goes on to the next cycle. Many bad policies in these blue states have gutted the middle class who flee thus destroying the tax base which then makes the blue states more reliant on fewer and fewer "rich" people. The top 1% pay 50% of the tax bill in California. When they leave, and they only need a few to leave, this whole scheme will collapse. California, Illinois, New York, New Jersey and Connecticut are either losing population or have population stagnation. All been run by progressive Democrats for a generation. When you leave and go to another state, please don't vote for the same knuckleheads that forced you to leave your state in the first place.


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