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
- 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.
Mish
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.
You know if it was already implemented? My family is going back to CA for a short period of time, but plan to leave as soon as possible.
Do you know if the tax has been passed yet?
I accidently typed the same comment sorry
For those with more than $30 million, $10,000 per month tax while living in California is nothing.
Taxing wealth is taxing paper value and unrealized profits. Assets go up and down in price. What is the “real” value unless you sold the asset for the accounting credits we call the dollar. The French tried this crap…it didn’t help. Wealthy moved to Belgium
Paying taxes on unrealized gains is absurd. You could pay the tax and the assets drops 50% at some point-does state give you a refund? The real answer is to tax capital gains…and elongate the long term capital gain definition to 2+ years or more. Then increase short term gains tax so we can milk the HFT hedge funds etc. Short term cap gains should be 50% to stop the market distortions and churn..plus it’s a realized profit and taxable wealth. Taxing assets (some which already have been taxed like property) is double-taxation and likely will lose in courts. The owner has already paid a sales tax, transfer tax and so on. The real estate agent has paid their taxes. Property taxes are for services provide to you because of your residency(I wish but thats the concept.) Handing wealth to homeless is just confiscation of private property…and the likelihood that it does anything is zero.
BUT, due to ridiculous tax laws, loopholes and cuts the newer generations have not had any of the benefits so therefore it’s a chicken coming back to roost for the greedy.
So Wuhan has not had one COVID case since May 10. In this article, it looks like hardy anyone wears a masks anymore?
China is just thinning the herd a little. Those who follow the government’s orders to wear a mask and social distance will survive. Those get sick and die have punished themselves. The government gets to play the “good cop” role because those getting sick are spread the message of be safe or be sorry for the government.
Hey, I’ve got some good deals on an inventory of bridges in AZ! Interested?
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.
Agree that’s out on a limb, but in early 2020 I would have said no way. Now I think it’s possible … and I wouldn’t care one bit, what an entitled oblivious prick.
It is unbelievable that they are still struggling to get 1.5 million signatures on the petition to put this on a ballot. I would think that due to the Covid arbitrary lockdowns, every nearly bankrupt business owner would be signing the petition. But what this shows is that the majority of people don’t pay attention to government or politics, even when it is in their interest to do so.
I don’t watch Fox but I have heard little to nothing about the recall on Bay Area news stations over the past 6 months.
Newsom is hoping that the vaccine will make things right and that voters have a short memory. So even if the petition succeeds, he is betting that the vote won’t succeed.
The Legislature is too Democratic. We need a Republican governor and not some dumb movie star like Schwarzenegger again.
California’s idiotic politicians who no brains can F themselves.
I’m surprised no one has blamed Trump for something in this thread yet.
That’s how relevant he has become.
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.
“So Ukraine is getting $430 million in the stimulus…I also read family members of unauthorized immigrants are now eligible to get stimulus checks.”
GTF out! Seriously?
Chump change.
“More recently, in fiscal year 2019, the US provided $3.8 billion in foreign military aid to Israel. Israel also benefits from about $8 billion of loan guarantees. Almost all US aid to Israel is now in the form of military assistance, while in the past it also received significant economic assistance.”
Almost all aid from Israel to the US is in the form of sacks of cash handed out to Congressmen and Senators.
Oh yeah, our Governor Newsom took state money plus some private contributions to put together (if I remember correctly) a $150 million fund to deliver stimulus payments to the undocumented (illegal) aliens who were not eligible for the first round of stimulus checks because they weren’t US citizens.
Chinese businesses in China got PPP too as US taxpayers love to pay taxes ! as they support Democrat politicians, most of middle-class taxpayers will become lower poor class !
You forgot to mention Newsomm burned all stimulus money to build homeless shelters as California just has only 1/2 homeless people in the country. He needs their votes to stay in power.
Newsomm just needs to make another deal with Chinese company as he did with BYD for 400M order for KN95 masks last April.
He will do a few more then he can retire in comfort !
Not just the big blue states in this game:
Everybody loves taxing other people. I noticed even our taxpayer rights groups supported a tax on card rooms.
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
The climate is changing these places out here before our very eyes. We moved to California in 2009 and it rains later and less each and every year. We use to think it rained too much the first few years. Now it doesnt rain for 10 months a year some years.
talk to anyone in wine country and they’ll tell you that without hesitation
It isn’t just wine country. It is everywhere.
Mostly depends on the bigger global climate picture. For example, whether there is an el Nino or la Nina in effect. This year is a la Nina, so expect less rain in CA and more moisture on the east coast.
I’ve enjoyed living on the Peninsula since early 1990’s but it is getting too crowded, too expensive and the infrastructure isn’t being repaired on time. People run through stop signs and red lights regularly.
The roads are truly awful up and down the Peninsula and SF, well just forget about it. It seems like the road builders don’t know how to make roads level and maintenance crews can repair a pothole! They have machines that with one driver can fill and repair a pothole in minutes, making it perfectly level. But around here they don’t use such machines. Here it is all about make work for the unions, so it takes hours and a 5-7 man crew to do even simple road repairs.
I am a native Floridian and I agree with you whole hearty California has some of the most incredible natural beauty along with great Cities. So does Europe, and Asia and South America! Would love to spend a couple of months in all. But live there I think not.
I love Florida but then I enjoy the heat so it does not bother me. These are the best beaches in the world hands down. I always felt guilty thinking that but now that I have been able to travel all over you will not find anything like the gulf coast in Florida. I will take Florida as a home base and travel as needed thank you.
My family moved from Ohio to Florida when I was 16 in 1969 a and I immediately fell in love with the state. I love the heat too and the beaches are by far the best and it is a very fun and dynamic place and it’s getting even more so. One of my daughters lived in LA for several years so I have been to CA about 10 times and have travelled all over. It’s a nice place but I wouldn’t want to live there. I found it confining. It i basically a strip of suburbs and strip malls that hug the coast. Inland there is desert and mountains that cut you off from the rest of the world. I see it as an enclave. In the East you drive through miles and miles of rich farmland between the cities. There is continuity. In California it’s megacity in the south and a megacity in the north and precious little habitation between. What I don’t like much is that it is very dry and I like lush greenery. It’s just a personal preference. California has nice scenery but there are lots of places in the world that are much better. The weather is nice though.
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.
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….
They actually get film tax credits and end up paying less.
I’ve been told that many part time workers in the entertainment industry collect unemployment in their off-time. So, the state is basically subsidizing large portions of that workforce.
Streaming media has sold very well during the COVID lockdown, so it has become a tax target.
Don’t they know how to hide their assets and income in off-shore shell LLC companies?
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.
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.
Maybe true but California isnt going to survive wildfires. I agree with you that population will be flocking to the midwest and intermountain west over the next 50 years. Personally I think we will be retiring in Canada.
It’s true California has too many people. Could stand to lose up to 10 million. I am looking at North Carolina — low property taxes (0.7%), reasonable income tax. Much more affordable and decent climate.
Clearly you’ve never been to North Carolina during ice storm season. They have at least one of these every year and it is a total disaster. We got stuck there for 3 nights in a high school gym because they decided to close the highways. North Carolina use to be a big tech center until globalization came along. The real story of most of America is globalization. California has benefitted from this the most. My friends in North Carolina lose their job and can’t find one for months or are forced into early retirement by companies like Cisco or IBM. Their jobs end up going to India.
Thanks for the perspective. I have been to NC 3 times, mainly the Research Triangle, never in winter.
I could tolerate the occasional ice storm if I had no mortgage. Luckily for me, all I need to do my job (in normal times) is an international airport and decent internet. NC should be fine for retirees.
I could live in the greater Tampa area too, but man that humidity.
“It’s true California has too many people. Could stand to lose up to 10 million.”
I had my fingers crossed that Covid would help with this but now that damn vaccine is throwing a wrench into that idea. We need more Covid deaths!
Unless you have Canadian citizenship, what makes you think Canada wants you?
On a purchasing power parity which is used by economists California is the 50th in the union when it comes to GDP per capita. China is about to overtake the U.S. in GDP but that’s only because they have 10x the population. Don’t use numbers to lie and promote your liberal agenda.
In terms of coming climate change effects, in the next 30-50 years max, the Fl Keys and Miami will almost certainly be underwater. As will at least 1/4 of LA and MS. TX & OK will be mainly desert like NM, AZ and Southern CA. The temperate farming area will be moving northward and into Canada where much of the southern part of the country will no longer be covered in snow in the winter. Unless we do massive ocean water desalination, there will not be enough fresh water to keep the newly desert states habitable.
You forgot to add:
1. California has more homeless than any state
2. California has more illegal immigrants than any state
3. California has more state/local government employees with highest salaries and more civil servants with annual compensation 200K+ than any state. Most of SAN FRANCISCO county employees have more than 190K annual salaries.
4. California has more civil servants with 400K annual pension than any state.
5. California is the only state that provides driver licenses to illegal immigrants and allow them to run for local offices.
6. California has higher state income taxes than most of states at 12.5%,
and sale taxes at 10%
7. California has more Spanish speaking residents at 25%+ of state population.
8. Soon, army of caravans from South America will hit US border around Feb. time frame and will reside in California as state residents will embrace them with ACLU+ liberal politician supports. They will provide another new millions of illegal immigrants who will be on state social service system.
9. California state representatives + state senators are very busy to figure how to add more taxes and fees. The latest example is that San Jose residents will have to pay for side walk pavement, repair + maintenance.
8.
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.
I just have to correct this, sorry.
The first modern income tax was passed in 1894, taxing income over $4K/yr.@conversation 2%. Only 10% of earners were affected, and yet a USSC case Pollack ruled it unconstitutional on a technicality of apportionment.
The Progressives (T. Roosevelt, Taft) ushered in the 16th Amendment in 1913, a full year before Gavrilo Princip slew Archduke Franz Ferdinand. Income taxation had nothing to do with WWI and it was permanent by virtue of being written into the Constitution.
Perhaps you have confused income tax with income tax withholding which was sold to the public as temporary during the FDR administration. Or the “temporary” exorbitant increases in tax rates during both World Wars, which then abated during peacetime. Whichever, the income tax, while unpopular, is clearly settled Constitutional law, permanent by design.
The same year the Fed was created. The purpose of the income tax was to pay for the interest on government issued bonds.
Until the War Revenue Act of 1917, only about 1% of Americans paid income tax, under the prior legislation that had been passed up until that time.
Although you are technically correct, the modern income tax really began doing WWI.
“The 16th Amendment, which gave Congress the power to levy an income tax, became part of the Constitution in 1913; in October of that year, a new income tax law introduced a graduated tax system, with rates starting at 1 percent and rising to 7 percent for taxpayers with income above $500,000. Though less than 1 percent of the population paid income tax at the time, the amendment marked an important shift, as before most citizens had carried on their economic affairs without government knowledge. In an attempt to assuage fears of excessive government intervention into private financial affairs, Congress added a clause in 1916 requiring that all information from tax returns be kept confidential.
By then, however, preparation for and entry into World War I had greatly increased the government’s need for revenue. Congress responded to this need by passing an initial Revenue Act in 1916, raising the lowest tax rate from 1 percent to 2 percent; those with incomes above $1.5 million were taxed at 15 percent. The act also imposed new taxes on estates and excess business profits.
By 1917, largely due to the new income tax rate, the annual federal budget was almost equal to the total budget for all the years between 1791 and 1916. Still more was required, however, and in October 1917 Congress passed the War Revenue Act, lowering the number of exemptions and greatly increasing tax rates. Under the 1917 act, a taxpayer with an income of only $40,000 was subject to a 16 percent tax rate, while one who earned $1.5 million faced a rate of 67 percent. While only five percent of the U.S. population was required to pay taxes, U.S. tax revenue increased from $809 million in 1917 to a whopping $3.6 billion the following year. By the time World War I ended in 1918, income tax revenue had funded a full one-third of the cost of the war effort.”
Perfect example of the ratchet effect and Reagan’s quip that the closest thing to immortality on Earth is a government program. Also, “Never let a good crisis (like WWI … or Covid19) go to waste.”
The primary reason the Constitution originally prohibited broad-based taxes was to prevent spending. You can’t spend what you don’t have, and you can’t borrow to spend if you don’t have a way to repay it.
Banks are robbed because that’s where the money is.
This is the other end of Mitch Romney’s 47%