California Pushes Wealth Tax, Includes Those Moving Out of State

The bill is titled “Wealth Tax: False Claims Act.”

QUICK FACTS:
  • The state of California introduced a bill that would tax the state’s wealthiest citizens, including former residents of California who moved to a different state.
  • Assemblymember Alex Lee (D) proposed the “Wealth Tax: False Claims Act” that demands an additional 1.5% tax on those with a “worldwide” net worth of over $1 billion.
  • A “worldwide” net worth includes assets, land, art, and stocks.
  • Should the bill pass, the tax would begin in January 2024.
  • Those with a net worth exceeding $50 million are also to be taxed 1% annually beginning in 2026.
  • A similar bill was introduced in 2020 but was rejected by the state Senate.
  • The bill would also establish the Wealth Tax Advisory Council to “determine an adequate level of annual funding and staffing for the administration and collection of the wealth tax.”
REACTIONS TO THE PROPOSED LEGISLATION:
  • “This is how we can keep addressing our budgetary issues,” said Assemblyman Lee, referring to the state’s $22.5 billion budget deficit.
  • Vice president of state projects at Tax Foundation Jared Walczak claimed the wealth tax would be “economically destructive, challenging to administer and would drive many wealthy residents — and all their current tax payments — out of state,” potentially defeating the purpose of the bill.
  • Walczak added that the bill could destroy businesses, as they would be taxed on “hundreds of millions of dollars’ worth of estimated business value that never actually materializes.”
BACKGROUND:
  • The state of California passed several new laws going into 2023, some of which enable prostitution, punish doctors spreading so-called “misinformation” regarding Covid-19, and others.
  • California Democrat Governor Gavin Newsom claimed the Second Amendment was a “suicide pact” and called for stricter gun control measures while being surrounded by his armed security.
  • As of June 2022, California ranked number 1 in the United States for gun control measures as well as ranking first in active shooter incidents.