The pandemic has put a $50 billion dent in California’s finances and Democrats are busy coming up with new ways to raise more tax money. Plans to consider a tax hike on those making more than $1 million was just put off until next year, but now a California Assemblyman has proposed a wealth tax on top earners:
A group of state lawmakers on Thursday proposed a first-in-the-nation state wealth tax that would hit about 30,400 California residents and raise an estimated $7.5 billion for the general fund.
The tax rate would be 0.4% of net worth, excluding directly held real estate, that exceeds $30 million for single and joint filers and $15 million for married filing separately.
California is facing a big budget deficit because of the health and economic crisis brought on by the coronavirus, and “we can’t simply rely on austerity measures,” to close it, said Rob Bonta, D-Oakland, lead author of AB2088. “We must consider revenue generation.”…
People subject to the wealth tax would report it to the Franchise Tax Board along with their income taxes. They would have to report all assets including stock in publicly and privately traded corporations; interests in partnerships, private equity or hedge funds; cash, bonds and savings accounts; mutual funds, futures and options; art and collectibles; offshore financial assets, pension funds, non-mortgage debt, real property and mortgage debt.
To be clear, property would not be considered as part of total wealth because it’s already taxed by property taxes, but they have to report it anyway. UC Berkeley economist Emmanuel Saez co-wrote a paper about the new tax. It makes clear that the wealthy would not be able to flee the state to avoid it because the wealth tax would continue for 10 years after someone leaves the state: