California legislators propose new raid on taxpayer earnings, euphemistically called a "wealth tax."
While city and county local government eye new taxes, California is going well beyond them to soak the rich. Chris Micheli reports for California Globe.
The bill would impose a tax of 0.4% of a state resident’s worldwide net worth in excess of $30 million, or in excess of $15 million for married taxpayers filing separately. The bill defined worldwide net worth based upon reference to federal tax law.
Worldwide net worth under this bill would be calculated in the manner set for calculation of the federal estate tax pursuant to Chapter 11 of Subtitle B of the Internal Revenue Code (IRC) in effect on June 15, 2020. The estate tax begins at Section 2011 of the IRC. Worldwide net worth is deemed to be the value of all worldwide property owned by the taxpayer on December 31 of each year.
Pursuant to Section 50307, the Legislature presumes that any taxpayer subject to this wealth tax is not a liquidity-constrained taxpayer if the taxpayer’s hard-to-value assets are less than 80% of the taxpayer’s total net worth. The FTB must adopt regulations regarding substantiating who is or is not a liquidity-constrained taxpayer. But, “for the removal of doubt, the Legislature finds that most taxpayers subject to the Wealth Tax should not be found liquidity constrained.
Pursuant to Section 50307, the Legislature presumes that any taxpayer subject to this wealth tax is not a liquidity-constrained taxpayer if the taxpayer’s hard-to-value assets are less than 80% of the taxpayer’s total net worth. The FTB must adopt regulations regarding substantiating who is or is not a liquidity-constrained taxpayer. But, “for the removal of doubt, the Legislature finds that most taxpayers subject to the Wealth Tax should not be found liquidity constrained."
Read more here.
Chris Micheli is a lobbyist with Aprea & Micheli, as well as an Adjunct Professor of Law at the University of the Pacific McGeorge School of Law.
This article is part of an Opp Now series on local wealth tax proposals:
CalMatters journalist Dan Walters explains why some Californians are questioning recent statewide efforts to tax (more—or out?) the rich.
The Daily Breeze argues that SJ Assemblymember Alex Lee’s proposed “wealth tax” might prove the last straw for billionaires to U-Haul it to Texas or Florida.
Follow Opportunity Now on Twitter @svopportunity.