Nearly a dozen California Democrats have co-sponsored legislation that would impose a wealth tax on the state’s richest individuals, even if they leave the state.
If passed, the new bill (AB 259) would impose an annual 1.5 percent tax on assets held anywhere in the world by a California resident whose net worth exceeds $1 billion (or $500 million for married taxpayers filing separately), beginning as early as Jan. 1, 2024.
Starting Jan. 1, 2026, individuals whose net worth exceeds $50 million (or $25 million for married taxpayers filing separately), would have their assets taxed at one percent per year.
“The working class has shouldered the tax burden for too long. In CA, we’ve introduced #ACA3 + #AB259 to tax the ultra rich & invest in all Californians,” Assembly member Alex Lee, one of the bill’s 10 sponsors, wrote on Twitter. “The ultra rich are paying little to nothing by hoarding their wealth through assets. Time to end that.”
The working class has shouldered the tax burden for too long. In CA, we’ve introduced #ACA3 + #AB259 to tax the ultra rich & invest in all Californians
The ultra rich are paying little to nothing by hoarding their wealth through assets. Time to end that https://t.co/DadERQTgiK
— Alex Lee 李天明 (@alex_lee) January 20, 2023
Lawmakers and activists pushing wealth tax proposals believe tax loopholes in the U.S.’s current system allow the wealthiest individuals to avoid paying what some believe to be a “fair” amount.
“Billionaires aren’t paying what they owe while enjoying public investments to build their empires,” Lee said in a separate post. “My colleagues today and colleagues from seven other states are introducing Wealth Taxes to bring tax justice.”
Assembly member Corey Jackson, a co-sponsor of the legislation, praised the effort, stating the bill would bring accountability.
“California is home to more billionaires than any other state,” Jackson wrote on Twitter. “They should not be allowed to play by a different set of rules. It is time they pay their fair share.”
I joined @alex_lee as a coauthor of AB 259, which will add a small & fair tax on CA’s wealthiest families. California is home to more billionaires than any other state. They should not be allowed to play by a different set of rules. It is time they pay their fair share. pic.twitter.com/vZhVGkIquY
— Assemblymember Corey Jackson (@AsmCoreyJackson) January 23, 2023
A flaw with many wealth tax proposals is that they seek to collect money from a person’s assets that may be held in illiquid investments or unrealized capital gains, meaning the money to pay the tax isn’t even available — the person would have to sell, or liquidate the asset to get the cash to pay the government.
California’s proposed bill would require taxpayers to make annual filings on wealth and eventually pay.
