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Tuesday, February 7, 2023
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Calif. Wants to Tax Wealthy Residents — Even after They’ve Moved from State

'Very few taxpayers would remit wealth taxes, but many taxpayers would pay the price... '

(Headline USA) California Democrats proposed legislation this week that would impose a new wealth tax on the state’s residents, including those who have moved out of the state.

The bill, introduced last week by California Assemblyman Alex Lee, would impose an extra annual 1.5% tax on those with a “worldwide net worth” above $1 billion, starting as early as next year. In 2026, the tax would begin to apply to those with net worths exceeding $50 million.

The legislation even includes a measure that would allow California to tax wealthy residents years after they’ve left the state by creating a contractual claim tied to the assets of a wealthy taxpayer. Under this claim, wealthy taxpayers would have to make annual filings with California’s Franchise Tax Board and eventually pay wealth taxes on assets that cannot be easily turned into cash.

In a tweet defending the bill, Lee claimed the wealth tax is a way to relieve “the tax burden” on the middle and lower classes.

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

Financial experts questioned whether California would be able to continue taxing residents after they’ve moved out of the state, arguing that it would likely be struck down as unconstitutional in the courts.

“A wealth tax could be particularly destructive in California, home to so many tech start-ups, because the owners of promising businesses could be taxed on hundreds of millions of dollars’ worth of estimated business value that never actually materializes,” Jared Walczak, vice president of state projects at Tax Foundation, told Fox News.

“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.”

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