California Democrats Introduce Wealth Tax Bill That Would Also Impact People Who Moved Out of State
California lawmakers are pushing legislation that would impose a new tax on the state’s wealthiest residents — even if they’ve already moved to another part of the country.
Alex Lee, an progressive Democrat Assemblyman, was last week introduced a bill in California State Legislature proposed that an additional 1.5% tax be imposed on all California residents who have a California State License. “worldwide net worth” Above $1 billion starting January 2024
The threshold for taxation would fall as early as 2026: people with wealth exceeding $50 million worldwide would be subject to a 1% tax, while billionaires would continue to be taxed at 1.5%.
The wealth of the world extends beyond an individual’s annual income and includes diverse holdings like farm assets, art, stocks, and interest in hedge funds.
California Gov. Gavin Newsom
(Justin Sullivan / Getty Images / File)
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This legislation is a modified version a wealth tax that was approved by the California Assembly in 2020. However, the Democrat-led state Senate rejected it.
This version was just released and includes measures to allow California To impose wealth taxes upon residents even after they have left the state and moved to another place.
California’s exit taxes are not new. The bill includes provisions to allow wealthy taxpayers to make contractual claims tied to their assets. This is because their wealth tax bill is not easy to pay. This claim would require taxpayers to file annual returns with California’s Franchise Tax Board, and eventually to pay the wealth taxes owed.
California was one of several blue states Last week, bills were unveiled to impose wealth taxes. Other states included Connecticut, Hawaii and Illinois as well as Minnesota, New York, Minnesota, New York, Maryland, Minnesota and Minnesota. Each state proposed a different tax approach but all were based on the same principle: the rich should pay more.
Lee’s office has not responded to requests for comment regarding this story. Lee has made statements that echo the message that wealthy residents should pay more taxes.
“The working class has shouldered the tax burden for too long,” Lee wrote in a tweet. “The ultra-rich are paying little to nothing by hoarding their wealth through assets. Time to end that.”
Lee stated that the tax would impact 0.1% Californians and generate an additional $21.6 million in state revenue. The money would go towards the state general fund. California is home to the following: among the highest taxes Any country in the world.
Advocates believe that the money will increase funding for schools and housing programs. Lee also hopes that it will help to reduce California’s $22.5 billion deficit.
Photo taken Jan. 24, 2013. Customer looks at TurboTax copy on sale at Costco Mountain View.
(AP Photo / Paul Sakuma).
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“This is how we can keep addressing our budgetary issues,” According to the Los Angeles Times, he said so. “Basically, we could plug the entire hole.”
Experts counter that the bill will cause an exodus of people from the state and increase administrative costs.
“It brings significant administrative challenges with respect to asset and liability valuation, high and distortionary effective rates, among other problems that make it an inefficient revenue source,” Fox New Digital was informed by Gordon Gray, American Action Forum director of fiscal policy.
Others also agreed with the assertion that California’s wealth tax would cause many Californians to flee the state.
“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,” Fox News Digital spoke with Jared Walczak (Vice President of State Projects at Tax Foundation), “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.”
A recent survey found that people are already shifting from high-tax states towards low-tax ones. analysis James Doti, Chapman University president emeritus, and economics professor. He found that net domestic migration was almost equal in the top 10 tax states to the lowest 10 tax states.
California legislators pushing the wealth tax believe they can “get around” Problem of residents moving “by trying to tax people even after they leave the state,” Patrick Gleason is the vice president of state affairs for Americans for Tax Reform. Gray, Walczak, and he all doubted the legality or declared it unconstitutional.
Experts argue that California’s new wealth tax could cause many Californians to move out of the state.
(Ian Joopson / File
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Studies in the past have shown that only 1% of taxpayers spend more than this amount. 50% California, New York and other states have income taxes on state income. This raises the question about how detrimental a mass exodus from wealthy residents might be to tax revenue.
Walczak mentioned that California’s wealth tax would be extremely problematic. He joked that Texasans should be most excited about such legislation, since there are many prominent Californians who have relocated to Texas in recent times.
“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,” Walczak. “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.”
Wealth taxes are supported by some, however, because they help to reduce economic inequality.
Maryland Democrat Delegate Jheanelle K. Wilkins has, for instance, proposed a bill that would allow families to owe taxes on inheritances exceeding $1 million instead of $5 million as it is today. After the COVID-19 pandemic, she said that such ideas would now be more popular.
“That’s quite a bit of funds that we’re leaving on the table,” She spoke to the Washington Post.
Others say that wealth taxes can be afforded by the rich because they are relatively small. Experts point out that they have a large impact because they are based on net wealth and not income.
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Walczak made the point in a blog post. postConsider a $50 million investment that was held for 10 years, earning a nominal 10% annual rate of return under a 3% inflation environment. This investment would have $46.5 million in investment returns in current dollars if it did not include a wealth tax after 10 years. It would however yield $37.3million if it were to levy a 1% wealth-tax, which would wipe out almost 20% of the gains.
Wealth taxes “cut deeply into investment returns, to the detriment of the broader economy,” wrote Walczak. “Average taxpayers may not care if the ultra-wealthy have lower net worths. But they will certainly care if innovation slows and investments decline.”
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