Most people these days are still reeling from the pandemic. The IRS and state governments are feeling the revenue pain too. One California bill with several cosponsors would increase the state’s already stratospheric top 13.3% income tax rate to 16.8%.
Not shocked yet? The newest tax some golden state legislators want to collect is a .4% wealth tax. The “leader” in state taxes already, this would be first-in-the nation wealth tax targeting the very wealthy. This isn’t on income they earn, mind you, but on their wealth itself. A summary of the bill says, “AB 2088 establishes a first-in-the-nation net worth tax, setting a 0.4% tax rate on all net worth above $30 million.” California Assembly member Rob Bonta, D-Oakland, proposed the legislation. The tax would be applied to the net worth of about 30,400 Californians, “raising approximately $7.5 billion annually,” the summary claims. “The tax takes into account all assets and liabilities held by an individual, globally, capturing the immense levels of accumulated wealth held by the top 0.1% of Californians.”
Various public employee and union groups are predictably behind the bill. So are environmental groups such as the Sierra Club. The targeted individuals may be eyeing a move out of California, but meanwhile, some observers think the wealth tax rate should be even higher. There are administrative nightmares too. Wealth isn’t about income, but about assets. How do you determine the value of everything you own? For example, what about stock options in private companies? You can bet that you might say one figure, and the notoriously aggressive Franchise Tax Board might say something quite different. That could prompt more than just billionaire CEO Elon Musk threatening to abandon California.