This is fearmongering. The bill was introduced a year ago, went nowhere, and is now dead. This WSJ article was published a month after the bill was officially killed…
The broader legislature has no interest in such a tax.
When many policies that start in California get adopted by much of the Democratic party, even the ideas being proposed show that it is the direction at least some subset of the party wants to go down. When WSJ opinion section is covering pieces like this, it's to point out the ideas that the Democrats are floating. While it may not have passed this time, it's setting the foundation for future debate on the topic.
> Edit: also note that this article is on the WSJ opinion page, and didn’t come from the news desk.
Thank you. We really need news websites to some how more clearly delineate opinion pieces from news desk pieces. In the old days, you knew which was which based on what page of the paper it was on. A standard that has all online opinion pieces published with a colored background or something would really help.
It doesn’t look dead. From your own link, it has been amended in late 2020 so it seems like the idea is alive and still being pushed. Am I missing something here?
Personally I disagree with the whole idea of wealth taxes, you should be taxed when you do things, not taxed just because you own something worth money. I should be able to go live in the woods alone and not have the government take some percent of my net worth just because I exist.
I mean I don't have a tonne of sympathy for people with tens of millions of net worth, but it just seems wrong in principle. If I start a company and it gets valued at 30 million dollars, why should the government be allowed to force me to sell my company to pay their wealth tax? Seems wrong to me, if you own something you should be allowed to keep it indefinitely. Property taxes are a bit of a grey area, but they make more sense because of all the infrastructure required for a house to be accessible.
Or another example, I own a piece of art or a car passed down through my family that is worth 30 million dollars (maybe it's a mclaren f1 or something). Now the government is going to force me to sell my car? I disagree with that, obviously that's an extreme case, but laws should still handle cases like that.
Personally, I disagree with the whole idea of income taxes. You should be taxed for owning things, because the government enforces your property rights, not just for labor, for which the government doesn't directly contribute at all. I should be able to earn money for my labor without the government taking a fraction every time it moves around. Even if you move to the woods, you're still taking military protection from the surrounding government- even if you somehow avoid using any other service like roads, public education, etc.
I don't understand this widespread belief that you have a right to permanent ownership. Someone has to enforce that ownership, and that has costs. What does seem wrong in principle is taxing transfers of money, which are virtually free with modern computer systems, not to mention the increased economic friction in the labor market.
You raise a good point with liquidity. Personally, I wonder, how could we set up a system of fractional ownership that delays repossession in such cases? Of course, if you never pay tax on that heirloom, then you'll eventually lose a controlling interest- and I think this makes sense, especially for fundamentally limited resources like land.
I've got several concerns with wealth taxes in general too:
1) They are difficult to enforce. How to measure the value of a famous painting? What if the value does down? Is there a refund of wealth taxes?
2) They are an entirely new class of taxes that will give politicians the ability to increase the overall tax burden over time. At first, they will only impact the very wealthy, but it is much easier to adjust the threshold down a little than create a whole new tax.
The history of income tax in the US is a guide. At first, it was temporary. Then only impacted a few people, now it is a progressive system that reaches large swaths of the population.
I don't think they should be routine, but given the highly unbalanced taxing environment of the past few decades which allowed for such massive wealth to accumulate (and rapidly grow during the pandemic) I see them as a reasonable corrective.
It also doesn't have to be ham-fisted. The concerns you bring up are legitimate and legislation is able to account for them.
The problems here are fairness, but also time. Wealth tax gathers funds from past and future actions, income tax only from future actions.
If you believe laws were totally fair in the past, then a wealth tax should be unfair now. Is that your stance? Has taxation been fair?
My stance is that the notion of private property is ingrained, we went to civil war due to private property of slaves, the french revolution was fomented due to financial problems due to untaxed private holdings of the church and wealthy people. Does having private property from the past mean it's ours and no one can touch it?
History has shown that oligarchies and massive wealth disparities lead to negative societal outcomes. IMO, Taxes should generate revenue for public works and lower negative societal outcomes due to negative externalities, therefore wealth tax is fine with me in principle.
I could go either way with wealth taxes—-there are efficiency and services arguments that go beyond just real property—-but I have zero problem with inheritance taxes.
You want a Van Gogh or McLaren, you go create value just as your deceased would-be benefactor did.
> “ I should be able to go live in the woods alone and not have the government take some percent of my net worth just because I exist.”
Reminds me of stories about people losing their homes for unpaid property taxes. I recall a story about some paultry amount of unpaid tax (<$100), but because the debt was neglected, the (a few) state's laws permitted the home to be siezed and sold to pay the unpaid amount, and the state gets to keep the balance.
> If I start a company and it gets valued at 30 million dollars, why should the government be allowed to force me to sell my company to pay their wealth tax?
I don't know the specifics of this proposal. But I live in a country that has a similar wealth tax, and it doesn't work that way here. When you found a company, its shares remain valued at nominal value for tax purposes, until you sell or transfer them. Only after that they'll be taxed as wealth.
> If I start a company and it gets valued at 30 million dollars, why should the government be allowed to force me to sell my company to pay their wealth tax?
How is the government forcing you to sell your company? They're forcing you to pay 0.4% of the money you own over those 30M dollars in tax, but that's it. Do you truly believe that there are people who make less than 0.4% per year profit on their >30M assets?
/Personally I disagree with the whole idea of wealth taxes, you should be taxed when you do things, not taxed just because you own something worth money./
I figure if we allow passive income, we should allow passive taxes...
Look at the route Islam took with Zakat. It's a form of "charity tax" that depends on wealth. However, your scenario does not hold, the government will not force you to sell your company or any shares it in, because those are not subject to Zakat (at least not directly). Gold and silver over a minimum amount are taxed at 2.5% per Hijri year, while produce is taxed at a different percentage.
Taxation of company shares depends on many things, such as the debt ratio and value of products the company owns. It's very possible to owe only a tiny amount, or none at all, while still doing business and making money. This is the superior approach which has proven to work if you look at history.
> Personally I disagree with the whole idea of wealth taxes, you should be taxed when you do things, not taxed just because you own something worth money.
I used to as well, but now I flipped. I don't think you should be taxed for doing things, I think you should be taxed for wealth. I think there should be no tax for working ( income ), buying things ( sales tax ), etc. Activity which promotes economic growth shouldn't be taxed. But wealth should be taxed. House/assets/etc should be taxed.
It's insane that you get taxed at 39% for work ( income ) but someone letting his money "do the work" gets taxed at 20% ( long term capital gains tax ).
> I should be able to go live in the woods alone and not have the government take some percent of my net worth just because I exist.
But the government protects your ability to do so. So no. Though I'd be in favor of governments setting aside land internationally where people are allowed to live "in a state of nature". They are not allowed to form tribes/governments, but are allowed to live "free" as they wish untaxed without the help of society.
> If I start a company and it gets valued at 30 million dollars, why should the government be allowed to force me to sell my company to pay their wealth tax?
Cause the company exists in a society governed/protected/etc by the government? It's the beneficiary of the environment.
> Now the government is going to force me to sell my car?
Nope. You could always go out and work to earn money to pay the wealth tax too and keep your car.
I'd be in favor of removing all taxes for one wealth tax.
I see it the opposite way around. We should only have a wealth tax and no income taxes. Capitalism means capital that earns for you while you sleep. Those who benefit the most from the system should pay for it. With only a wealth tax more people would have the means to amass wealth and there would be a greater incentive to spend rather than sit on money which would be good for the health and dynamism of the economy.
> Or another example, I own a piece of art or a car passed down through my family that is worth 30 million dollars (maybe it's a mclaren f1 or something).
There is no meaningful reason that a society should want you to inherit a piece of art or a car from your ancestors. (The only practical one is that the sorts of families who can pass down expensive art also control society.)
You didn't work for that art or car; you simply had the fortune to be born into a family with one. Every single reason why it is unjust for someone to inherit a government role applies here. If you don't think King James the Nth should rule simply because King James the N-1st did, why do you think James Jr. should have 30 million dollars in financial power simply because James Sr. did?
Just like hereditary rule, hereditary property breaks the fundamental relationship between work and reward that is common to any functional society. If you work hard and get a spare $30M to buy a car, sure, whatever, we can say you were incentivized to work hard and produce $30M of value. But if you work hard and give your kid $30M, how is your kid incentivized to do anything?
And the argument that well-off parents have an inherent right to make their kids' lives easier leads directly to the correlation between class and race/caste. If it's moral for me to make my children better off than others' children, who is to say it's immoral for me to make my nieces and nephews several times removed better off, too? Who is to say it's immoral to make all the people in this town who came from a certain ancestral lineage better off?
And on top of all that, it usually doesn't even work. We associate "nepotism" with waste and corruption, not just distasteful behavior, because we understand those who are chosen because of their family relationships generally aren't more qualified than the rest of the candidates. Even at the smallest scales, when you hear stories of the CEO's college-age kid getting an internship, it's almost always the case that the child has not inherited any particular talent, and in fact is probably less talented than would be needed for the job.
Parents should be allowed to provide for their children to set them up for adulthood - they should be able to pay for housing and food and clothing and education. When they can't, society should step in to help them, and we're almost there: we have welfare programs and private charities for basic needs, free public education, and (at least among private colleges with sufficient endowments) full need-based financial aid. Parents should not be able to do more than that, in a society that prizes democracy and equality over the natural superiority of certain families.
There are of course exceptions but in most cases that $30 million+ could only have been made because of the system that exists within California/USA. Paying taxes on that $30 million is just a way to support the stability of such a system that allowed an individual to make that much money. How many people with very little wealth actually inherit a $30 million car? Probably few enough that it would be more constructive to focus on the scenario most extremely wealthy people inhabit.
I'm not sure what the problem is. When Democrat supporters demand more more more via the politicians who promise more more more, where did they think the money would come from?
Believe it or not, the bottom ~50% don't have enough money to tax. The next 30-40% have some but not enough to raise enough money to help. The taxes have to be focused on the top 10% and more likely the top 1-3% to raise enough to meet these demands.
I think the biggest problem will be trying to enact this on people who aren't California (or even US) residents who are now out of state. You can tax visitors for actions they take while they're in your state (sales tax, hotel taxes, even income) but when they're not there and haven't been there for years?
The State of California may get a rude awakening on this one.
Well I guess I'll take the apparently bold stance here that this isn't the end of Silicon Valley or California and yes this is fair and further, good. When people are getting 5-6% returns on investments (minimum), 0.4% is still not even stopping the rich get richer effect. Not to mention that it's almost certain no one here will ever be touched by this tax.
If you're going to move where you live or significantly alter where you spend you time because of 0.4% of things above 30M, that's a real sign of just how far American greed has gone. The rich will drive themselves right into another french revolution unless they start realizing that taxes need to return to where they were from the 1930's-1970's. Trickle down economics is a known failure and at this point it's a question of when the pendulum will start swinging the other way.
The Dutch tax from cursory reading is not comparable - apparently, if you pay wealth tax, you are exempt from capital gains tax; also, if your wealth is real estate outside of the Netherlands, it is not taxed.
It may be more comparable to Norway’s wealth tax, which is 0.85% of everything above 200K€ (With some provisions for primary residence and illiquid shares IIUC, discounting these somewhat)
A Norwegian tax professional I had a chance to talk to a few months ago claimed that wealthy people were leaving Norway because of the wealth tax. Are there any Norwegians in the forum that can say more about this?
The difference here is that California is a state not a country. It's much easier for a wealthy person or company to relocate to another state than it is to another country. The EU may have made it easier to relocate to another EU country than it was in the pre EU days but it's still nowhere as frictionless as moving from California to Washington, Texas, or Georgia.
Not big fan of taxes in general but I find the whole 'wealth' tax to be especially odious. Why not call it what it is, a pre-death estate tax? If the government is to tariff/tax, it should be done at the time of use or income generation/realization one time. Unfortunately double jeopardy laws seem not to apply to capital.
I don't like the Dutch system, having experienced it personally, but it is worth pointing out that the wealth tax exists in place of a capital gains tax.
There is a HUGE difference between the 2 if I understand them correctly
CA is imposing a tax on the TOTAL wealth of a person over the limits and excluding real property.
The Dutch impose a tax on the increased value of the wealth in the year, even if it was not "realized", which is more like our Capital Gains.
So an example, if you had Stocks worth 100 million, and they increased in value to 108 million in 2020
Dutch: 108-100: 8 million taxable, you owe $128,000
CA: 108 Million, you owe $432,000
Pretty large difference
and the Dutch Model is better in some ways when your assets DROP in value, which does happen,
so if we are in recession your stocks go from 100 million to 90 million, under the Dutch Model you would not owe taxes, under the CA model you still would
The tax rate will never be high enough for the California Government. It is so mismanaged the only plausible solution is a default on its endless obligations.
California should eliminate its income tax through ballot initiative. Moving it, from the highest in the nation to zero. Thats right. Zero.
Can you imagine how awesome California would become with no income tax? Everyone would instantly get a 10% raise. The quality of everything would go up and the cost of everything would go down. Standards of living would instantly go up.
Other states provide a much higher standard of living with zero tax. California can do it too.
>Taxing someone who spends only 60 days in the state in any single year—and extending that tax over an ensuing decade—would be something new under the sun.
Aside from the problem that Wealth Taxes have been tried multiple times in many countries and failed, or the fact that enforcement would be more expensive than the revenue collected-
I think most people object to the idea of taxiing people who pass through for 60 days then keep taxing them for a decade of their life to support a state doubling spending with no real improvement in infrastructure, health, education or our citizens well being.
The highest taxes in the country to support what? San Francisco for exampple, has doubled it’s budget in 10 years with the population growing only 12%. The California legislature keeps passing highly creative yet extreme anti wealth measures while massively increasing spending.
Can anyone say life in San Francisco has improved in the last decade? By any objective measure it's far worse. Not just for tech but for small business in particular- the regulation, taxes and cost of doing business in the state are oppressive.
Yet we want to enact more policies to drive out the tax base? Brilliant. The top 1% of taxpayers supports half the budget of the state. Instead of speeding this exodus up, why not enact real reform. The state needs a revolution- a massive reset in spending from ground zero- not a bunch of new taxes that force even more companies out.
It should be just the opposite: real estate is the limited resource that all people in California need to share, not the revenue of a multi-national company concentrated in 1 state.
Insanely good weather is not an universal counterweight to every hare-brained idea that the political class may come up with. This sounds as a repellent to foreign capital as well, not just richer Americans.
> Today, California’s wealthiest 1% pay approximately 46% of total state income taxes. Adding the wealth tax to individual taxes and including those taxpayers who have abandoned California, the combination of the two proposals would have 1% of the state’s population paying about 53% of individual taxes.
This is insane. That 1% will simply pick up and leave and the state will end up in a long expensive legal battle to collect from them all.
And then who will be left to pay for everything?
> For most taxpayers, the cost of compliance would far exceed the amount of the tax. A resident with a net worth of $31 million would be subject to a wealth tax of $4,000. The cost of an annual appraisal of each of that taxpayer’s assets could easily exceed $100,000. The state would have to hire auditors to chase people all over the world.
60 days, wow the level of stupidity. Once again another case of good intentions, bad outcomes.
I'm a lead for a company that sends engineering teams into CA for probably 3-4 months total spread out over a year. Now we would have to totally reconsider how that will go. God forbid one of the team got sick for an extended hospital stay. Their travel costs are reimbursed, but what if they accidentally fall victim to the wealth tax (more like wealth trap), would the company be liable to cover it for a decade? How absurd does that sound.
Anecdotal story: I was born and raised in CA up to 2005 when I left for college, so was my father and mother. My entire immediate family has since left for either CO, FL or TX, and more extended family are following. We were all high net worth and have small business's or well paid STEM jobs. My uncle is about to move his entire business out of the state because the level of regulation and taxation is getting ridiculous. The other week he visited my parents in TX and marveled at how well maintained the roads were and how cheap the gas was, with no shanty towns along the freeways. The mismanagement of CA is out of control. Everyone I know that has left is so glad to have left at this point and hasn't looked back. The exodus of high net worth individuals to other states who don't think they are evil money hoarders will simply keep occurring until CA wakes with no money and a federal government refusing to bail them out.
There are a lot of interesting laws about what transpires if you stay somewhere 'too long'. And most of these laws are suspended for college students, simply because if they were enforced for students, then the out of state students would suddenly be candidates for in-state tuition.
My wife and I plan to travel extensively in retirement. We have traveled a lot so far in life, but only one week here, two weeks there, limited by vacation time. When we travel in retirement, we plan to stay two to four weeks in each place we visit, away from home for months at a time. Except that if you are in your home state for less than six months plus one day, residency becomes and issue (in almost every state) and can have tax implications. Most people never have to face that situation, but I have one close acquaintance that has dealt with this issue for the last five years as a resident of Florida. He says that if the state suspects that you are skirting the edge of your residency requirements, they can request your non-specific state-based cell phone data for the calendar year, and it will be provided to the state. It won't be fine grained location data, but it will say how many days you were in that state.
I find the idea lovely for the following reason: I am a great believer in the idea of competition, especially between nation states, and in the US, between states.
If California were to ever make such a dumb move (I'm 99% sure they wont'), they are going to create tons of opportunities for nearby states as all the rich folks will move elsewhere with their capital.
Please, California, keep on taxing the goose with the golden eggs.
I don’t agree with this tax but one of the great things about this country is that each state can experiment.
California is experimenting with higher state income taxes. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming are experimenting with having none.
I think distributed work will win this decade so people will be much more mobile than before. There will be a tighter feedback loop for policy makers to learn what works and what doesn’t.
I think this whole thing could be simultaneously more palatable, more progressive and actually more effective if it was coupled with a commitment to actually meaningfully redistribute the proceeds, rather than just treat them like any other part of the general fund.
The UK has discussed the idea of a "Universal Inheritance", provided to young adults, from a dedicated sovereign wealth fund. Their proposal was that the whole thing should be funded by inheritance taxes, but I don't see why a wealth tax wouldn't be just as appropriate. California already has CalPERS and CalSTRS.
https://www.independent.co.uk/voices/universal-minimum-inher...
If the motivation of a wealth tax is to decrease actual inequality, that goal might be more tangible putting cash into the hands of a 20 year old kid than being poured into some mismanaged capital project.
This is unenforceable. California has no Texas Rangers that can hunt you down in other states. California has no standing in another state's courts for collecting this tax. And that's a good thing too. Consider child-support payments --- they require states to cooperate. But you may never be able to enter California again.
Wealth taxes are extremely invasive. Commerce is inherently visible (because it necessarily involves other people). What you own is private.
The cost of even figuring out your net worth is substantial and would still be borne by people nowhere near the threshold... in fact, in the case of this bill everyone is required to report their assets to the state. The aggregate cost just from the reporting would probably dwarf the revenue.
Regardless of your politics or your views on taxation this is plan and simple a bad law.
[+] [-] frogblast|5 years ago|reply
The broader legislature has no interest in such a tax.
This is the bill in question: http://leginfo.legislature.ca.gov/faces/billStatusClient.xht...
Edit: also note that this article is on the WSJ opinion page, and didn’t come from the news desk.
[+] [-] dang|5 years ago|reply
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
[+] [-] kyrra|5 years ago|reply
If you want a news side of it, here's the WSJ news talking about it during the primaries when many of the candidates were discussing it: https://www.wsj.com/articles/democrats-emerging-tax-idea-loo...
[+] [-] secabeen|5 years ago|reply
Thank you. We really need news websites to some how more clearly delineate opinion pieces from news desk pieces. In the old days, you knew which was which based on what page of the paper it was on. A standard that has all online opinion pieces published with a colored background or something would really help.
[+] [-] throwawaysea|5 years ago|reply
[+] [-] greyhair|5 years ago|reply
[+] [-] jelliclesfarm|5 years ago|reply
[+] [-] GhostVII|5 years ago|reply
I mean I don't have a tonne of sympathy for people with tens of millions of net worth, but it just seems wrong in principle. If I start a company and it gets valued at 30 million dollars, why should the government be allowed to force me to sell my company to pay their wealth tax? Seems wrong to me, if you own something you should be allowed to keep it indefinitely. Property taxes are a bit of a grey area, but they make more sense because of all the infrastructure required for a house to be accessible.
Or another example, I own a piece of art or a car passed down through my family that is worth 30 million dollars (maybe it's a mclaren f1 or something). Now the government is going to force me to sell my car? I disagree with that, obviously that's an extreme case, but laws should still handle cases like that.
[+] [-] Straw|5 years ago|reply
I don't understand this widespread belief that you have a right to permanent ownership. Someone has to enforce that ownership, and that has costs. What does seem wrong in principle is taxing transfers of money, which are virtually free with modern computer systems, not to mention the increased economic friction in the labor market.
You raise a good point with liquidity. Personally, I wonder, how could we set up a system of fractional ownership that delays repossession in such cases? Of course, if you never pay tax on that heirloom, then you'll eventually lose a controlling interest- and I think this makes sense, especially for fundamentally limited resources like land.
[+] [-] mmcconnell1618|5 years ago|reply
1) They are difficult to enforce. How to measure the value of a famous painting? What if the value does down? Is there a refund of wealth taxes?
2) They are an entirely new class of taxes that will give politicians the ability to increase the overall tax burden over time. At first, they will only impact the very wealthy, but it is much easier to adjust the threshold down a little than create a whole new tax.
The history of income tax in the US is a guide. At first, it was temporary. Then only impacted a few people, now it is a progressive system that reaches large swaths of the population.
https://en.wikipedia.org/wiki/History_of_taxation_in_the_Uni....
[+] [-] GavinMcG|5 years ago|reply
It also doesn't have to be ham-fisted. The concerns you bring up are legitimate and legislation is able to account for them.
[+] [-] Dumblydorr|5 years ago|reply
If you believe laws were totally fair in the past, then a wealth tax should be unfair now. Is that your stance? Has taxation been fair?
My stance is that the notion of private property is ingrained, we went to civil war due to private property of slaves, the french revolution was fomented due to financial problems due to untaxed private holdings of the church and wealthy people. Does having private property from the past mean it's ours and no one can touch it?
History has shown that oligarchies and massive wealth disparities lead to negative societal outcomes. IMO, Taxes should generate revenue for public works and lower negative societal outcomes due to negative externalities, therefore wealth tax is fine with me in principle.
[+] [-] bradleyjg|5 years ago|reply
I could go either way with wealth taxes—-there are efficiency and services arguments that go beyond just real property—-but I have zero problem with inheritance taxes.
You want a Van Gogh or McLaren, you go create value just as your deceased would-be benefactor did.
[+] [-] xtiansimon|5 years ago|reply
Reminds me of stories about people losing their homes for unpaid property taxes. I recall a story about some paultry amount of unpaid tax (<$100), but because the debt was neglected, the (a few) state's laws permitted the home to be siezed and sold to pay the unpaid amount, and the state gets to keep the balance.
Even owning a home in the woods isn’t safe.
[+] [-] Maarten88|5 years ago|reply
I don't know the specifics of this proposal. But I live in a country that has a similar wealth tax, and it doesn't work that way here. When you found a company, its shares remain valued at nominal value for tax purposes, until you sell or transfer them. Only after that they'll be taxed as wealth.
[+] [-] tsimionescu|5 years ago|reply
How is the government forcing you to sell your company? They're forcing you to pay 0.4% of the money you own over those 30M dollars in tax, but that's it. Do you truly believe that there are people who make less than 0.4% per year profit on their >30M assets?
[+] [-] sdenton4|5 years ago|reply
I figure if we allow passive income, we should allow passive taxes...
[+] [-] confidantlake|5 years ago|reply
[+] [-] apta|5 years ago|reply
Taxation of company shares depends on many things, such as the debt ratio and value of products the company owns. It's very possible to owe only a tiny amount, or none at all, while still doing business and making money. This is the superior approach which has proven to work if you look at history.
[+] [-] disown|5 years ago|reply
I used to as well, but now I flipped. I don't think you should be taxed for doing things, I think you should be taxed for wealth. I think there should be no tax for working ( income ), buying things ( sales tax ), etc. Activity which promotes economic growth shouldn't be taxed. But wealth should be taxed. House/assets/etc should be taxed.
It's insane that you get taxed at 39% for work ( income ) but someone letting his money "do the work" gets taxed at 20% ( long term capital gains tax ).
> I should be able to go live in the woods alone and not have the government take some percent of my net worth just because I exist.
But the government protects your ability to do so. So no. Though I'd be in favor of governments setting aside land internationally where people are allowed to live "in a state of nature". They are not allowed to form tribes/governments, but are allowed to live "free" as they wish untaxed without the help of society.
> If I start a company and it gets valued at 30 million dollars, why should the government be allowed to force me to sell my company to pay their wealth tax?
Cause the company exists in a society governed/protected/etc by the government? It's the beneficiary of the environment.
> Now the government is going to force me to sell my car?
Nope. You could always go out and work to earn money to pay the wealth tax too and keep your car.
I'd be in favor of removing all taxes for one wealth tax.
[+] [-] unknown|5 years ago|reply
[deleted]
[+] [-] rorykoehler|5 years ago|reply
[+] [-] geofft|5 years ago|reply
There is no meaningful reason that a society should want you to inherit a piece of art or a car from your ancestors. (The only practical one is that the sorts of families who can pass down expensive art also control society.)
You didn't work for that art or car; you simply had the fortune to be born into a family with one. Every single reason why it is unjust for someone to inherit a government role applies here. If you don't think King James the Nth should rule simply because King James the N-1st did, why do you think James Jr. should have 30 million dollars in financial power simply because James Sr. did?
Just like hereditary rule, hereditary property breaks the fundamental relationship between work and reward that is common to any functional society. If you work hard and get a spare $30M to buy a car, sure, whatever, we can say you were incentivized to work hard and produce $30M of value. But if you work hard and give your kid $30M, how is your kid incentivized to do anything?
And the argument that well-off parents have an inherent right to make their kids' lives easier leads directly to the correlation between class and race/caste. If it's moral for me to make my children better off than others' children, who is to say it's immoral for me to make my nieces and nephews several times removed better off, too? Who is to say it's immoral to make all the people in this town who came from a certain ancestral lineage better off?
And on top of all that, it usually doesn't even work. We associate "nepotism" with waste and corruption, not just distasteful behavior, because we understand those who are chosen because of their family relationships generally aren't more qualified than the rest of the candidates. Even at the smallest scales, when you hear stories of the CEO's college-age kid getting an internship, it's almost always the case that the child has not inherited any particular talent, and in fact is probably less talented than would be needed for the job.
Parents should be allowed to provide for their children to set them up for adulthood - they should be able to pay for housing and food and clothing and education. When they can't, society should step in to help them, and we're almost there: we have welfare programs and private charities for basic needs, free public education, and (at least among private colleges with sufficient endowments) full need-based financial aid. Parents should not be able to do more than that, in a society that prizes democracy and equality over the natural superiority of certain families.
[+] [-] blovescoffee|5 years ago|reply
[+] [-] caseysoftware|5 years ago|reply
Believe it or not, the bottom ~50% don't have enough money to tax. The next 30-40% have some but not enough to raise enough money to help. The taxes have to be focused on the top 10% and more likely the top 1-3% to raise enough to meet these demands.
I think the biggest problem will be trying to enact this on people who aren't California (or even US) residents who are now out of state. You can tax visitors for actions they take while they're in your state (sales tax, hotel taxes, even income) but when they're not there and haven't been there for years?
The State of California may get a rude awakening on this one.
[+] [-] adjkant|5 years ago|reply
If you're going to move where you live or significantly alter where you spend you time because of 0.4% of things above 30M, that's a real sign of just how far American greed has gone. The rich will drive themselves right into another french revolution unless they start realizing that taxes need to return to where they were from the 1930's-1970's. Trickle down economics is a known failure and at this point it's a question of when the pendulum will start swinging the other way.
[+] [-] throwaway2245|5 years ago|reply
The Dutch equivalent is 1.6% tax on wealth above €1m.
The number of Ultra High Net Worth Individuals in the Netherlands is still increasing.
[+] [-] beagle3|5 years ago|reply
It may be more comparable to Norway’s wealth tax, which is 0.85% of everything above 200K€ (With some provisions for primary residence and illiquid shares IIUC, discounting these somewhat)
A Norwegian tax professional I had a chance to talk to a few months ago claimed that wealthy people were leaving Norway because of the wealth tax. Are there any Norwegians in the forum that can say more about this?
[+] [-] Mountain_Skies|5 years ago|reply
[+] [-] beezle|5 years ago|reply
[+] [-] ichbinwiederda|5 years ago|reply
[+] [-] Metus|5 years ago|reply
[+] [-] syshum|5 years ago|reply
CA is imposing a tax on the TOTAL wealth of a person over the limits and excluding real property.
The Dutch impose a tax on the increased value of the wealth in the year, even if it was not "realized", which is more like our Capital Gains.
So an example, if you had Stocks worth 100 million, and they increased in value to 108 million in 2020
Dutch: 108-100: 8 million taxable, you owe $128,000
CA: 108 Million, you owe $432,000
Pretty large difference
and the Dutch Model is better in some ways when your assets DROP in value, which does happen,
so if we are in recession your stocks go from 100 million to 90 million, under the Dutch Model you would not owe taxes, under the CA model you still would
[+] [-] AbrahamParangi|5 years ago|reply
[+] [-] justinzollars|5 years ago|reply
California should eliminate its income tax through ballot initiative. Moving it, from the highest in the nation to zero. Thats right. Zero.
Can you imagine how awesome California would become with no income tax? Everyone would instantly get a 10% raise. The quality of everything would go up and the cost of everything would go down. Standards of living would instantly go up.
Other states provide a much higher standard of living with zero tax. California can do it too.
[+] [-] tasubotadas|5 years ago|reply
Wow. That's nuts.
[+] [-] jboydyhacker|5 years ago|reply
I think most people object to the idea of taxiing people who pass through for 60 days then keep taxing them for a decade of their life to support a state doubling spending with no real improvement in infrastructure, health, education or our citizens well being.
The highest taxes in the country to support what? San Francisco for exampple, has doubled it’s budget in 10 years with the population growing only 12%. The California legislature keeps passing highly creative yet extreme anti wealth measures while massively increasing spending.
Can anyone say life in San Francisco has improved in the last decade? By any objective measure it's far worse. Not just for tech but for small business in particular- the regulation, taxes and cost of doing business in the state are oppressive.
Yet we want to enact more policies to drive out the tax base? Brilliant. The top 1% of taxpayers supports half the budget of the state. Instead of speeding this exodus up, why not enact real reform. The state needs a revolution- a massive reset in spending from ground zero- not a bunch of new taxes that force even more companies out.
[+] [-] belltaco|5 years ago|reply
[+] [-] xiphias2|5 years ago|reply
[+] [-] DoofusOfDeath|5 years ago|reply
[+] [-] inglor_cz|5 years ago|reply
[+] [-] DoofusOfDeath|5 years ago|reply
E.g., are there any Constitutional barriers to one state charging income tax on someone merely passing through?
Or, e.g., could CA tax the income of someone who is no longer a resident?
What mechanisms if any proscribe that kind of money grab?
[+] [-] fortran77|5 years ago|reply
This is insane. That 1% will simply pick up and leave and the state will end up in a long expensive legal battle to collect from them all.
And then who will be left to pay for everything?
> For most taxpayers, the cost of compliance would far exceed the amount of the tax. A resident with a net worth of $31 million would be subject to a wealth tax of $4,000. The cost of an annual appraisal of each of that taxpayer’s assets could easily exceed $100,000. The state would have to hire auditors to chase people all over the world.
[+] [-] noetic_techy|5 years ago|reply
I'm a lead for a company that sends engineering teams into CA for probably 3-4 months total spread out over a year. Now we would have to totally reconsider how that will go. God forbid one of the team got sick for an extended hospital stay. Their travel costs are reimbursed, but what if they accidentally fall victim to the wealth tax (more like wealth trap), would the company be liable to cover it for a decade? How absurd does that sound.
Anecdotal story: I was born and raised in CA up to 2005 when I left for college, so was my father and mother. My entire immediate family has since left for either CO, FL or TX, and more extended family are following. We were all high net worth and have small business's or well paid STEM jobs. My uncle is about to move his entire business out of the state because the level of regulation and taxation is getting ridiculous. The other week he visited my parents in TX and marveled at how well maintained the roads were and how cheap the gas was, with no shanty towns along the freeways. The mismanagement of CA is out of control. Everyone I know that has left is so glad to have left at this point and hasn't looked back. The exodus of high net worth individuals to other states who don't think they are evil money hoarders will simply keep occurring until CA wakes with no money and a federal government refusing to bail them out.
You can't vote NO on proposition bankruptcy.
[+] [-] greyhair|5 years ago|reply
My wife and I plan to travel extensively in retirement. We have traveled a lot so far in life, but only one week here, two weeks there, limited by vacation time. When we travel in retirement, we plan to stay two to four weeks in each place we visit, away from home for months at a time. Except that if you are in your home state for less than six months plus one day, residency becomes and issue (in almost every state) and can have tax implications. Most people never have to face that situation, but I have one close acquaintance that has dealt with this issue for the last five years as a resident of Florida. He says that if the state suspects that you are skirting the edge of your residency requirements, they can request your non-specific state-based cell phone data for the calendar year, and it will be provided to the state. It won't be fine grained location data, but it will say how many days you were in that state.
[+] [-] ur-whale|5 years ago|reply
If California were to ever make such a dumb move (I'm 99% sure they wont'), they are going to create tons of opportunities for nearby states as all the rich folks will move elsewhere with their capital.
Please, California, keep on taxing the goose with the golden eggs.
Politicians should be playing more Sim City.
[+] [-] nondeveloper|5 years ago|reply
California is experimenting with higher state income taxes. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming are experimenting with having none.
I think distributed work will win this decade so people will be much more mobile than before. There will be a tighter feedback loop for policy makers to learn what works and what doesn’t.
[+] [-] abeppu|5 years ago|reply
The UK has discussed the idea of a "Universal Inheritance", provided to young adults, from a dedicated sovereign wealth fund. Their proposal was that the whole thing should be funded by inheritance taxes, but I don't see why a wealth tax wouldn't be just as appropriate. California already has CalPERS and CalSTRS. https://www.independent.co.uk/voices/universal-minimum-inher...
If the motivation of a wealth tax is to decrease actual inequality, that goal might be more tangible putting cash into the hands of a 20 year old kid than being poured into some mismanaged capital project.
[+] [-] 762236|5 years ago|reply
[+] [-] nullc|5 years ago|reply
The cost of even figuring out your net worth is substantial and would still be borne by people nowhere near the threshold... in fact, in the case of this bill everyone is required to report their assets to the state. The aggregate cost just from the reporting would probably dwarf the revenue.
Regardless of your politics or your views on taxation this is plan and simple a bad law.
https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm... (Bill text)