It is not enough that Californians already pay some of the highest taxes in the U.S. With fuzzy logic, it now wants to impose another income tax increase coupled with a wealth tax in the Golden State!
The 2020 State Business Tax Climate Index, produced by the Tax Foundation, ranks California near the end of its list of tax environments at 48. Only New York and New Jersey are worse. Now, California seems intent upon claiming the bottom slot.
Liberal Democrats introduced two new tax bills to further penalize the wealthy, AB 1253 and AB 2088. AB 1253 imposes additional income taxes of 1, 3, and 3.5 percent on earnings that exceed $1, $2, and $5 million retroactively to the beginning of 2020.
AB 2088 imposes a 0.4 percent tax on all personal wealth over $15 million, including all assets worldwide. These two bills are a direct attack on private property.
Thus, AB 1253 will drive the top state tax bracket from 13.3 percent to 16.8 percent. Add federal income tax and the proposed wealth tax from AB 2088, and there is little incentive for the wealthy to work or stay in California.
California’s AB 2088 is the first tax on wealth in the U.S. One of the bill’s sponsors, Assemblyman Rob Bonta (D) of Oakland, claims it will only affect 30,400 Californians and raise $7.5 billion annually. He uses the excuse that “families are hurting” from the coronavirus to justify the tax.
However, he would be more accurate to look for socialist mismanagement. California is suffering a staggering coronavirus-induced deficit of $54.3 billion caused by draconian lockdowns that snuffed out nearly 30,000 businesses. His solution is more socialism; soak the rich. Many people fear the wealthy will continue to flee California. There is a good reason for concern based on historical evidence.
Leftist politicians should see how the wealth taxes have performed elsewhere to predict the outcome in California.
People need only look at socialist wealth taxes in Europe. For example, France passed a wealth tax that resulted in the exodus of 42,000 millionaires from France from 2000 to 2012. The initiative was subsequently shelved.
In 1990, twelve European countries had a wealth tax; today, there are only three. The wealth tax is difficult to implement, suffocates those with many assets but little cash and encourages the wealthy to flee. It also raises marginal revenue. Most importantly, it is gravely unjust!
California provides an equal opportunity to everyone, but according to assemblyman Miguel Santiago (D) Los Angeles, “California has been very good to some, it’s time they pay their fair share; we need the revenue.” However, the wealthy pay more than their “fair share.”
According to a 2017 study conducted by the Tax Foundation, the top one percent paid more income tax than the lower 90 percent combined. Those figures are 37.3 percent versus 30.5 percent, respectively.
To put this in better perspective, the top 50 percent of wage earners paid 97 percent of all the income tax while the lower 50 percent paid the remaining 3.1
California has a serious spending, not revenue problem. Liberals have chosen to implement socialist policies that give benefits the government cannot afford to give to many who do not deserve to receive them.
If socialist bills like AB 1253 and AB 2088 are approved, California will be facing a bleak future with leftists at the helm. Those with sufficient business acumen and financial resources will leave and invest in states like North Carolina, Texas, Florida and Utah. While the actual number of individuals leaving is not huge, the loss of tax revenue is.
It is not a crime to be wealthy despite what leftists think. Those who have generated businesses and accumulated wealth must not sit idly and watch socialists take an even greater share of their private property.
AB 1253 and AB 2088 represent more socialism to fix the problem that socialist policies created in the first place. The Golden State’s liberal politicians will kill the proverbial Golden Goose while providing advantages and profits only for attorneys, accountants and moving companies.