Democratic lawmakers in California have proposed two new tax tiers for the state’s ultra-high-net-worth individuals. Assemblymember Alex Lee (D. San Jose) introduced the bill last week. It will affect all households with over $50million. Households worth more than $1 billion will be subject to a 1.5% wealth tax. It targets wealth accumulation, and not income, unlike previous wealth taxes.
A study done by University of California Berkeley-Davis professors found that such a tax could generate over $22 trillion in state revenue. However, its ability to pass may be stymied by the state’s existing tax-rate limit of 0.4%. Voters would have to specifically approve a measure to surpass that limit if the tax was to become law, and some fear that even the mere threat of higher taxes would be enough to spook California’s billionaires into fleeing for less pricey pastures.
California is home to more millionaires than any other US State, but Lee says that the state is growing in high-income residents. He insisted in a recent interview with Fox News that while some might claim the state is hemorrhaging wealthy people – Tesla tycoon and world’s richest person Elon Musk did just move his electric car factory from Palo Alto to Texas – it’s really the poor and middle class who are leaving, priced out of their communities by ever-soaring rents and gentrification.
“With a tax on the ultra-wealthy who pay a lower effective tax rate than the bottom 99%, we can invest in our schools, tackle homelessness, expand needed services, and much more,”Lee went on. Parts of California – specifically the cities of San Francisco and Los Angeles – have become notorious for their homelessness problem, with sprawling tent cities abutting million dollar homes.
Lee tried before to pass a wealth tax, but to no avail. Last year, a similar bill was introduced but it died before the committee could hear it. Should he and the bill’s co-authors finally convince Californians their state needs a wealth tax, the measure would take effect in 2023 for billionaires and in 2025 for households worth over $50 million.
California also has some of America’s wealthiest legislators. California’s Congress is home to twenty-millionaires, which includes Senator Dianne Feinstein and Nancy Pelosi, the House Speaker, respectively Democrats.
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