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.
- Elon Musk Leaves California: As Tech Flees Silicon Valley, Rents Plunge
- New York: Flee New York If You Can
- Illinois: Escape Illinois: Get The Hell Out Now, We Are
- Illinois: It Takes 3 Weeks to Escape Illinois
Those are the proper responses to tax madness.