California Assemblyman Proposes Wealth Tax

California is at it again. State Assemblyman Rob Bonta, working with the state’s teachers unions, has proposed a new tax of 0.4% on the net worth of individuals and couples worth more than $30,000,000. What’s more is that the tax would apply not only to residents of California, but also to former residents who leave the state in an attempt to protect their hard-earned assets.

Besides the obvious constitutional issues that accompany a tax on residents and assets of another state, the Las Vegas Review-Journal also points out that it is difficult to accurately determine net wealth in many cases – noting that “art, collectibles, stock options, pension funds, and overseas investments” are difficult to assess. Even if this tax passed the legislature, survived legal challenges and was implemented, it would serve only one purpose – to accelerate the flight of California’s investors and job creators to states where their money is more welcome.

California has the nation’s most burdensome income tax, capping out at 13.3% on the state’s highest earners. Already, IRS data tells us that California is losing $73.52 billion in net adjusted gross income each year, and that the state has lost 773,963 people between 1985 and 2018. It should come as little surprise that the top three recipients of California’s wealth flight were Nevada (0% income tax), Texas (0% income tax), and Arizona (4.50% income tax).  Should the state legislature pass this wealth tax, look for the flight of wealth and people out of California to further accelerate – hurting the state’s budget situation even further.