The new wealth tax being pushed by the California Democrats is the latest in several recent Golden State steps to tax the rich, and not the last one in the works.
Last week, Democratic Rep. Alex Lee introduced a bill in California that would impose a 1.5% annual tax on anyone with a “global net worth” over $1 billion, starting as early as January 2024.
As early as 2026, the tax threshold will be lowered, with those with global net worths above $50 million being subject to an annual tax of 1% on their wealth, while billionaires will still be taxed at 1.5%. tax is levied.
The bill was approved by the California legislature in 2020 and is a modified version of the wealth tax that the Democratic-led state Senate refused to pass.
California Democrats Consider Wealth Tax — Including Those Who Moved Out of State
The current version, which was just introduced, includes measures that allow California to impose a wealth tax even years after California residents have left the state and moved elsewhere. I’m here.
A wealth tax is one of several proposals in the state aimed at high-income earners, experts say.
“California’s Democratic wealth tax is the kind of class warfare that California voters rejected when they voted down Prop. The rich pay higher taxes,” Patrick Gleason, American’s vice president of state affairs for tax reform, told Fox News Digital.
Proposition 30 is a 2022 ballot measure that would raise the state’s top income tax rate (which is already the highest in the nation at 13.3%) above 15%. About 58% of voters rejected the tax increase.
But despite a crushing defeat, another effort to raise California’s top marginal tax rate is already on the ballot in the 2024 election. Officially named the California Pandemic Early Detection and Prevention Initiative, the measure will increase the state’s top marginal income tax rate from its current level to 14.05% on income over $5 million. The new top tax rate will be in effect for 10 years.
The proposed tax increase was put to a vote with the help of Guarding Against Pandemics, a nonprofit founded and led by Gabe Bankman-Fried, brother of former FTX CEO Sam Bankman-Fried. The group has devoted millions of dollars to campaigns to win statewide initiatives that tax California’s wealthiest residents and fund public health initiatives by voting, the Los Angeles Times reports. increase.
Gabe Bankman-Fried stepped down from the board in November, three days after FTX filed for bankruptcy.
Wealthy Californians could face billions in new taxes after midterm elections
It’s unclear whether Democratic Gov. Gavin Newsom will support the 2024 bill. His office did not respond to a request for comment. The governor opposed Proposition 30.
In another proposal last year that did not pass, lawmakers would increase the tax rate to 13.3%, 1% on gross income over $1 million, 3% on income over $2 million, and 3% on income over $5 million. I tried to add a 3.5% surcharge to the
But California Democrats aren’t just pushing for higher taxes on the wealthy. Many such initiatives are statewide.
For example, last year Congress introduced a bill that would impose a 25% tax on profits from homes resold within three years of purchase, the Los Angeles Times noted at the time.
Perhaps most impressively, in the summer of 2020, California lawmakers passed and Newsom signed a massive tax increase for employers. This happened in the summer of 2020, in the middle of the COVID-19 pandemic. Limit the business tax credit to $5 million annually by deducting the net operating loss incurred if the annual deduction exceeds the income for that year.
According to the California Tax Foundation, the law “helps California employers $9.2 billion over three years by limiting and suspending tax laws designed to help businesses in distress and help California jobs. $ ($4.4 billion in 2020) tax increase”.
U-HAUL says Texas and Florida will remain top moving destinations in 2022
Despite these taxes, California faces a massive $22.5 billion deficit this year. Having introduced the latest wealth tax, Lee hopes his bill can address the current deficit.
“This way we can continue to deal with budget issues,” he told the Los Angeles Times. “Basically, we were able to plug the whole hole.”
Economists disagree about the point at which tax increases can backfire in terms of increasing government revenues. But what is clear is that people are leaving high-tax states, including California.
In fact, according to a recent analysis by James Doty, President Emeritus and Professor of Economics, the 10 states with the highest tax rates will account for nearly 1 in 100 residents in net domestic migration from July 2021 to July 2022. The 10 states with the lowest tax rates have lost nearly 1 in 100. at Chapman University.
Meanwhile, the U-Haul Growth Index, which measured more than 2 million one-way trips last year, found California, the only state with a population over 30 million, to rank last in the index for demand for trucks from the golden zone. It turns out that spike state.
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Recent statistics show that the top 0.5% of taxpayers pay 40% of California’s income tax, so the outflow of especially high-income Californians could be problematic for government coffers. I have.
In a recent interview with California Public Radio, California Department of Treasury’s H.D. Palmer said 1% of the total number of income tax returns filed in 2020 accounted for more than 49% of all personal income taxes paid. said there is. in that year.