In California government, bad ideas are like nightmares. They keep coming back, even though they can’t survive the light of day.
One such idea is the “wealth tax,” a failed proposal that seeks to “reduce wealth inequality” by taking an annual bite out of the assets of people who are “obscenely ultra rich,” in the words of the author of the latest version of the bill.
Assemblymember Alex Lee, D-San Jose, complained that “there’s a whole other category of wealth where you just own things,” and income tax doesn’t capture a share of it. So he has re-introduced a proposal that would slap a 1% annual tax on the global assets of Californians with a net worth of at least $50 million, 1.5% on the holdings of anyone with assets of more than $1 billion.
The proposed legislation is Assembly Bill 2289, and it is supported by the California Federation of Teachers despite record spending on education in the current state budget. CFT president Jeff Freitas said in a statement, “California billionaires have increased their wealth astronomically since the beginning of the pandemic, while regular working folks have struggled to pay their bills.”
But the disparate impact of pandemic restrictions is only the latest justification offered for redistributionist tax schemes in California, which already has the highest marginal state income tax rates in the country. With a top tax rate of 13.3% on the highest-earning Californians, the argument that the rich are not paying “their fair share” is absurd.
When last year’s version of the “wealth tax” was under consideration, a report from the California Policy Lab on the alleged “CalExodus” noted that the top 0.5% of California taxpayers account for 40% of state income tax revenues.
Although the researchers said they found no evidence of a “pronounced” exodus from the state and “little” evidence that wealthy Californians are leaving “en masse,” they noted that “the choice of a single billionaire to leave the state could have an outsized effect on the state’s coffers.”
That makes an annual tax on the global assets of wealthy state residents a profoundly stupid idea. It is an engraved invitation for high-wealth residents to leave, and just as importantly, it’s a tremendous disincentive for entrepreneurs to locate their start-ups in California. That hurts job creation, and the lack of good jobs in the state worsens income inequality. California has the nation’s highest poverty rate, with more than 15% of state residents living in poverty.
The solution can’t be found in confiscatory taxation. It can only be found in broad-based economic growth. State leaders should be focused on fostering the conditions for job creation, instead of introducing counter-productive proposals dripping with stale leftist rhetoric.
To the frustration of progressives who support the idea of a wealth tax, the idea can’t get off the ground in progressive California. Last year’s version of the wealth tax bill never even had a legislative committee hearing. Governor Gavin Newsom has not endorsed the idea of further raising taxes on the wealthiest Californians.
One of the most visible California billionaires, Elon Musk, is today a Texas billionaire, having moved his company’s headquarters from Palo Alto to Austin. Texans will now have those high-paying jobs, and they’ll be paying the Texas state income tax rate of zero.
It’s a cautionary tale, or should be, for California lawmakers.
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“One such idea is the “wealth tax,” a failed proposal that seeks to “reduce wealth inequality” by taking an annual bite out of the assets of people who are “obscenely ultra rich,” in the words of the author of the latest version of the bill.”
‘Mrs Pelosi, do you care to comment on that?’
Just when will the Democrat fools realize that when people get rich, they buy consumer goods that in the creation of those goods beget a chain reaction of job creation where people can earn real lives in the ability to Self-govern. When the liberals take away that money in taxes, the job creation is stopped dead in its tracks, the money is just consumed rather than invested and all that is left is human manure fit for plant fertilizer which even then just ends up unused in the socialist septic tanks of incompetence.
Businesses likewise pay no taxes. Raise the taxes on a business and they just raise their prices where YOU and I have to pay the price, in the hidden taxes of INFLATION if lucky, or the businesses go out of business and we all lose our Jobs. It’s the Democrat circle of death that kills the American capitalist circle of economic life for more social redistribution where poverty disguised as equity is all that is left to equally distribute. Have you filled your gas tank lately? Take from the earners and give to the consumers and before you know it, you have a Biden economy that adds a whole new meaning and acceleration to the law of diminishing returns. Put them in charge of your military and you get the reality of diminishing protection. Their economic promises are a believable as Putin’s on Ukraine, that socialist leader of the now growing Slavic slave world that socialist envision for the good old USA.
Never. The left, OWNS the definition of being insane..
The treachery of the traitorous, socialist Democrat Party know no bounds.
Exactly what is your fair share of what somebody else has worked for??
To commucrats like this, Their “Fair share” IS WHAT EVER they demand.
Why stop at 1.5%. Why not 99%? Why not 100%? Those rich people OWE us. Take their homes, their cars, their clothes, their gold teeth. Take it all and leave them on the street. Then KILL THEM.
Isn’t that what you communist pigs REALLY want to do?
Why do you think, they LOVED seeing those mass smash and grabs!
well you may as well bring back the misery index from the carter years.
Did that ever go away?