Margaret Thatcher famously said, “The problem with socialism is that you eventually run out of other people’s money.” We are seeing that principle currently illustrated in the formerly great State of California.
On Monday, Fox News reported the following:
California lawmakers are pushing legislation that would impose a new tax on the state’s wealthiest residents — even if they’ve already moved to another part of the country.
Assemblyman Alex Lee, a progressive Democrat, last week introduced a bill in the California State Legislature that would impose an extra annual 1.5% tax on those with a “worldwide net worth” above $1 billion, starting as early as January 2024.
As early as 2026, the threshold for being taxed would drop: those with a worldwide net worth exceeding $50 million would be hit with a 1% annual tax on wealth, while billionaires would still be taxed 1.5%.
…The current version just introduced includes measures to allow California to impose wealth taxes on residents even years after they left the state and moved elsewhere.
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.
The article includes a wonderful quote:
“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,” said Walczak (Jared Walczak, vice president of state projects at Tax Foundation). “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.”
This is another really bad idea to come out of the State of California. I believe we fought a war to end ‘taxation without representation.’ If people no longer live in the state, they no longer vote in the state and are therefore not represented.