California Gov. Gavin Newsom Wants to Tax People Even After They Flee His State

California Democrats want to push legislation that would tax state revenues wealthiest residentsEven if they have moved to another state, they are still eligible for this benefit.

Alex Lee, a progressive Democrat, introduced the bill last week. He wants to impose an additional 1.5 percent. annual tax on Californians With a “worldwide net worth” Increased to $1 billion in January 2024 with the intention of lowering it to $500 million by 2020. Fox News reports.

“Worldwide net worth” incorporates diverse holdings such as farm assets, arts and other collectibles, as well as stocks and hedge fund interest.

This is the second approval of a California Assembly wealth tax in three years. The state Senate ultimately defeated a similar bill from 2020.

California will be able to impose this tax for many years on residents who have left the state with the updated version.

“Exit taxes aren’t new in California. But this bill also includes provisions to create contractual claims tied to the assets of a wealthy taxpayer who doesn’t have the cash to pay their annual wealth tax bill because most of their assets aren’t easily turned into cash. This claim would require the taxpayer to make annual filings with California’s Franchise Tax Board and eventually pay the wealth taxes owed, even if they’ve moved to another state,” Fox News reported.

California was one of many blue states to introduce a bill that imposed a wealth-tax. Each state has a different tax approach, but they all share the same basic principle that the wealthy must pay more. 

“The working class has shouldered the tax burden for too long,” Lee tweeted. “The ultra-rich are paying little to nothing by hoarding their wealth through assets. Time to end that.”

Lee claims that the tax would only impact 0.1% of households. However, it will generate $21.6billion in state revenue. This, he believes, will allow the state fund its $22.5billion budget deficit.

“This is how we can keep addressing our budgetary issues,” He spoke to the Los Angeles Times. “Basically, we could plug the entire hole”

Some experts think that the bill could lead to an exodus of the riches and their businesses.

“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 News spoke with Gordon Gray, American Action Forum director of fiscal policy.

Other experts also voiced similar concerns.

“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 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,” He concluded.

Under Governor Newsom’s leadership, the last few years have seen an increase in economic growth. mass exodus of Californians Texas, one of the most red states in America. Walczak said that Texans should be most excited about such a statute.

“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 advocated by those who believe they are necessary to address economic inequality. This has been highlighted and exacerbated by the COVID-19 pandemic.

Walczak however, believes that wealth taxes should be applied “cut deeply into investment returns, to the detriment of the broader economy.”

“Average taxpayers may not care if the ultra-wealthy have lower net worths. But they will certainly care if innovation slows and investments decline,” He concluded.