For all its faults, many people still think of California as “the place you oughta be,” as one long-ago sitcom theme song has it. Besides swimmin’ pools and movie stars, it has temperate weather year-round, beautiful beaches, breathtaking scenery, and amazing things to see and do.
Unfortunately, the political progressives who run the state are dragging it down. The taxes, regulations, and bizarre social policies they’ve put in place are driving people away. The latest proposal to hit the drawing board is a new wealth tax that would go after the billionaires whose tax payments are keeping the state going.
It’s as though they’re intent on killing the goose, as the fairy tale puts it, that lays the golden eggs.
The latest proposal, if it gains any kind of steam, is sure to drive away the remaining investors, job creators, and the people who actually pay taxes who have not yet fled the state because of the high taxes, declining public school performance, rising crime and the failure to prosecute those who commit them (if they’re caught) and other outrageous ideas like $5 million payments to individuals as reparations for slavery plus the establishment of an annual guaranteed income worth $97,000 in today’s dollars.
California was never a “slave state” – at least not in the traditional sense of the term. The wealth tax proposal introduced in the legislature on January 23, 2023, may make it seem like one if it passes.
Unlike an income tax, which is determined based on what you bring in each year, wealth taxes are assessed based on everything you own. It’s a tax on the whole Magilla, as my great uncle used to say, with all that implies.
The bill, A.B. 259, calls for the imposition of a yearly tax of 1.5% of any California resident’s total, global net worth “in excess of $1,000,000,000, or in excess of $500,000,000 in the case of a married taxpayer filing separately.”
That may not seem like a lot. The rate is low, and it only applies to billionaires. Then again, that’s what people thought about the income tax when it was first introduced, at a low rate, applying only to millionaires and multi-millionaires.
As the bill is currently written, it’s an easy tax to escape. All one must do is give up one’s California residence which, given that the top income tax rate is already 13%, doesn’t seem like much of a hardship. Except it doesn’t take into account what would happen to the people left who are left behind.
Demographer Wendell Cox, who runs the Demographia.com website and who studies the economic impact of interstate migration, says a global wealth tax would “likely accelerate the already substantial migration out of California, which has been driving out middle-income households with its unconscionably high cost of living and taxation.”
He’s not wrong. The effect of out-migration is already being felt in substantial ways. After the 2020 census, and for the first time since statehood in 1850, California lost a congressional seat. That’s a big deal.
Looking at who pays taxes in California, Cox believes a wealth tax would have a disastrous effect on the state’s economy. “Those with the highest incomes, only 0.5% of the population, pay 40% of the state income tax revenue, meaning the new tax could drive out more revenue than it raises, as wealthy taxpayers leave for more friendly states,” he says.
California has an expansive social safety net and is forced to absorb an unknown number of undocumented workers into its economy every year thanks to the illegal crossings that occur every day over the border with Mexico. All that comes at a great cost. If the cash cows in Silicon Valley and other parts of Northern California and the hedge fund managers and investors around Los Angeles take the introduction of a wealth tax as an indication of what’s coming, the numbers of dollars taken out of the state as the people who generate them relocate to no-tax Texas or Tennessee could be catastrophic.
It’s all avoidable. Yet for some unfathomable reason, the people in power there now, from Democratic Gov. Gavin Newsom on down seem intent on the state where people used to go to claim their share of the America Dream into a kind of neo-socialist nightmare. Newsom wants to be president in the worst way, but if the Californication of the United States is what he has in mind, we’ll pass, thank you.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
A former UPI political writer and U.S. News and World Report columnist, Peter Roff is a Trans-Atlantic Leadership Network media fellow. Contact him at RoffColumns AT mail.com or on Twitter @TheRoffDraft.
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