California Legislators introduced a bill to impose a “worldwide wealth” tax Even after leaving the state, they can still be accessed by wealthy people.
The legislation, introduced by California Democratic Assemblymember Alex Lee, would create a 1.5% tax for a resident’s worldwide net worth that exceeds $1 billion in the 2024 and 2025 tax years. The bill would subsequently create a 1% annual tax for a resident’s worldwide net worth that exceeds $50 million and an additional 0.5% tax for worldwide wealth exceeding $1 billion.
“With this modest tax on the ultra-wealthy who pay a lower effective tax rate than the bottom 99%, we would have sustained investments in our schools, tackle homelessness, maintain and expand needed services, and much more,” Lee said that in a press release. “We’ve been losing our lower and middle-income residents that are being priced out of this state because they can’t afford the high cost of living while shouldering the burden of paying for our roads, infrastructure, and schools all the while the ultra-wealthy doubled their fortunes during the pandemic.”
Unlike an income tax, under which an individual only pays a certain portion of new income, wealth taxes are based upon an individual’s assets. California’s bill would require current and former residents to pay according to the value of stocks and savings accounts, art and collectibles as well as real estate and pension funds.
The portion of an individual’s wealth eligible for the tax would be decided with an equation that weighs the number of years in which an individual lived in California out of the previous four years. The numerator for new residents would be zero, and the denominator four. In the next two years, it would rise to one, and then two. A taxpayer who is “no longer a resident” “does not have the reasonable expectation to return to the state,” The numerator would be a fraction of one and zero “based on the percentage of days in the year the taxpayer was present in the state, plus the years of residence over the three previous taxable years.” In later years, the numerator would be gradually reduced.
Joe Lonsdale (a venture capitalist and entrepreneur) recently moved to Texas from California. interview Fox Business “This is really more a theatrical production going on in California,” He said so. “The state’s a total mess. And what they’re doing here is they’re signaling something crazy, and they’re probably going to compromise and tax the billionaires more some other way. But it’s really ridiculous.”
California residents were the ones who suggested this proposal. presented California Proposition 30: measure This would have raised taxes on personal income over $2 million by 1.75% to fund zero-emission vehicle infrastructure. Voters rejected The proposal to increase the 58% to 42% margin during the midterm election.
California has a 13.5% effective tax rate, making it one of the most taxed states in America, according to an analysis. analysis From the Tax Foundation. Another study found that wealthy Americans provide a significant share of federal income, even if they are not as rich in developed countries. report The Tax Foundation noted that top earners paid 40% or more of federal income taxes for 2018.
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