California lawmakers appear intent on making the Eagles song Hotel California a reality … at least when it comes to taxes for those who try to flee the state. At the Hotel California, “you can check-out any time you like, but you can never leave!” With soaring costs and a massive $24 billion deficit, the state is also facing an exodus of people leaving the state. The solution? Convert the state into a tax Venus flytrap: not only impose a wealth tax on those caught in the state but tax those who try to leave.
The new bill introduced by Democratic Assemblyman Alex Lee would impose an extra annual 1.5% tax on those with a “worldwide net worth” above $1 billion, starting as early as January 2024.
The law has a cynical bait-and-switch provision. The billionaire tax is just meant for the initial packaging and passage. It can therefore be sold as a “billionaire’s tax.” However, in two years, the threshold drops to a worldwide net worth exceeding $50 million. While billionaires would stay at 1.5%, those in the lower tax bracket would be hit by a 1% added rate on worldwide assets.
It also includes the taxation on those who left the state . . . many due to the high taxes. California already has the highest tax burden in the nation. It relies on its top 1% of taxpayers for roughly half of its individual income tax revenue, but continually treats those taxpayers like game in a canned hunt. The result, not surprisingly, is that they are leaving for states like Texas and Florida.
The new tax would arrange for payments to California’s Franchise Tax Board for years after a departure for those assets which are not easily converted into cash.
I have previously written how the wealth tax pushed by Democrats like Sen. Elizabeth Warren are unconstitutional under the federal Constitution. States are not subject to the same limit. Not surprisingly, the highest taxing states are pursuing the most wealthy . . . who are leaving in droves. That includes Connecticut, Hawaii, Illinois, Maryland, Minnesota, New York and Washington.
What is most striking under the proposed law is that it will not only spur more wealthy couples to leave the state but discourage any from moving into the state. Even if this ill-considered law does not pass, who wants to risk going to a state that is actively pursuing new ways to tax you even if you ever decide to leave? With many in the top one percent getting out of the state, the tax demand on the most wealthy is only likely to increase with the dwindling numbers in the top tax brackets. No one wants to be the last buffalo on the plains for the California tax collectors.
Under the existing exit tax, businesses and individuals must pay a one-time tax to leave based on the value of the business or individual’s assets, including property, stocks, and other investments. For those who have earned more than $30 million, you can continue to pay for years after fleeing the state. The current exit tax is 0.4% of an individuals’ net worth over $30,000,000 in a tax year, including assets located outside of California other than real estate.
Taxing wealth is no easy matter so the proposal seeks $660 million per year for administrative costs.
California is also considering constitutional amendments and referendums to increase taxes for the most wealthy.
Last thing I remember, I wasRunning for the doorI had to find the passage backTo the place I was before“Relax, ” said the night man“We are programmed to receiveYou can check out any time you likeBut you can never leave”
Initially, my admittedly untutored assumption was that in order to enforce such a law, a resident’s assets, including cash in banks, would be frozen by the state until the tax is paid. But this would be impossible; how would the tax authorities know you were leaving and not coming back? Would they be on the lookout for wealthy people who liquidate their assets in anticipation of flight? If so, what would the state do next? Remind them of their tax “obligations?” How in the world could an exit tax be enforced? Anybody?
Seems to be unenforceable against non-residents.
Add Massachusetts to your list of overtaxing states Professor and we were already on the list of states people were fleeing.
The most recent law was approved by the voters in a referendum in November so I have no complaint-* but the idea was to removes us from the small list of true flat tax states by taxing income over $1,000,000. Most people thought that meant $1,000,000 in wages but it is for all income and will hit small business people selling a business and some very middle class homeowners in the Boston suburbs who are downsizing in retirement.
The real issue of course is $1,000,000 this year, $200,000 next year
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*Selfishly I also have no complaint because it will never affect me
Yes, the threshold limits will be lowered in the middle of the night someday. But inflation at Joe Biden levels will push other people up into existing thresholds. Graduated tax systems give the government an interest in depreciating the currency.
I should have also noted, that like almost taxes, it’s the consumer who pays (or in the case of the downsizing seniors, it’s the next person that buys the house). Ballplayers paying higher taxes leads to higher ticket prices. Higher taxes on selling a small business means higher prices by the new owner. Etc. Leftists always think taxing the rich is free money
A sure sign of a totalitarian state is restrictions on the right to travel. In the Soviet Union, you needed government permission to move out of the country and within the country.
Well, the millions they’re giving away in “reparations” and guaranteed income have to be subsidized somehow. And being a “sanctuary” for illegal immigrants is expensive too. Hoping this hits Hollywood hard. Maybe people will think twice next time before voting for a Democrat — after they wreck the economy, they raise your taxes to fix the problem.
This must be Governor Newsom’s financial blueprint for all Sanctuary states. And this guy wants to be President in 2024 ????
So will the National Socialist WOKE Democrat Party steal the election in 2024 with a Newsom/Warren ticket?
What a nightmare.
Congress, approaching default on the nation’s credit card, may have a golden opportunity to lead by example – creating performance incentives for government bureaucrats and de-monopolizing government services (2 or more government agencies competing with each other for the same “customers” or competing with the private sector) – serving it’s citizens).
For example: if the “Veteran’s Administration” can’t simply mail out checks to America’s heroes, that fight our wars, why not create a 2nd agency to compete with the VA – let the veterans (customers) choose which agency they want to deal with?
This plan would literally defund bad government management and reward good government managers. This performance-incentive plan would actually benefit Democrats also, not just Republicans.
Most Americans would probably agree that more than 50% of their tax dollars are wasted, not providing any benefit to taxpayers. Removing government-monopolies (within government) couldn’t produce a worse result than we have now. This plan would create “healthy competition” focused on the “customers” (citizens/taxpayers).
This is precisely the model states like California need to emulate. Congress could start today. Raise the debt ceiling but agree to de-monopolize government agencies. Government employees (demoralized by do-nothing bureaucracies) would probably like actually helping people for once.
For example: if the “Veteran’s Administration” can’t simply mail out checks to America’s heroes, that fight our wars, why not create a 2nd agency to compete with the VA – let the veterans (customers) choose which agency they want to deal with?
There already exists a VA ability to do just that now…..called “Community Care” that works well.
Upon being transferred to Community Care, where the Veteran has VA funded private care, one escapes from the VA Clinic/Hospital system of medical care.
My personal experience proves to me that is the better model….VA funded care for eligible Veterans out In their Community rather than in VA Facilities.
The rub is the VA is a large bureaucracy left over form WWII and it really deep down does not like the competition and works very hards at cancelling that Community Care authorization and forcing a Veteran to return the less than warm embrace of the VA Medical System.
I have had one Cataract Surgery, and two Hip Replacements done and currently have my Primary Care done by a local provider paid for by the VA.
That program works if the VA permits the Veteran to participate in that program. They need to do far more of it and not waste money on yet more in-efficient and far more costly Out-Patient Clinics.
The only reason I use the VA is for the free prescriptions I need….all related to problems resulting from my exposure to Agent Orange and Wounds received in combat.
Those are ordered by my VA paid Community Care Primary Provider and filled by the VA Pharmacy that is in my VA Region.
The most efficient and effective part of my VA Care is that Pharmacy…..and the horror stories I can tell about the rest of the VA, that are. not made up but happened to me are flat disgusting.
During a pre-surgery consult for a hip replacement I was handed off to a PA who was offering a Steroid Injection in one of my knees….that ended with a complaint to the VA that resulted in no action.
Following a Colonostrophy I was briefed by the Physician doing the procedure that all was fine….and a month later was sent for a surgery consult to remove my Colon…..to be asked by the Surgeon why I was there.
That was my question to him and then I explained what the original report was….the same report he was looking at…..and again…..complaint made and nothing heard.
Come the second Hip Replacement…..the administrative process took almost a full year…..only to have the VA authorize the replacement….but for the wrong hip. Solution was to start the whole process over again.
Again, complaint filed….nothing heard.
My heart felt view is simple…..limit the VA to doing Pension and Compensation Evaluations and start a program that immediately enrolls the Veteran into a Community Care Program and end the VA Outpatient Clinic and Hospitals.
The VA should fund the Veterans care under the same basic rules they have….based upon the current criteria….but move to a Government funded but privately provided health care system for Veterans.
There could be exceptions for specialty treatment like prostethics and other types of services the VA has excellent expertise in providing.
The basic problem with the VA is it is unionized, bureaucratically, and has no competition and relies upon funding by Congress and administration of the funding by people that only give lip service to being there “FOR” the Veterans.
There are some very good people at the VA….but they are far outnumbered by the sorry ones.
With my community care provider….I can pick up the phone….call his Office…get an immediate answer with a real person….state my needs and get action….sometimes be seen the same day.
I can guarantee you that does not happen with a VA Out Patient Clinic or Hospital with the exception of the VA Pharmacy I deal with……as they are exemplary in their dedication to helping their Veterans.
I strongly recommend upon reaching an impasse or gross failure by the your local VA medical provider, VA Outpatient Clinic, or VA Hospital……you should call the Whitehouse VA Hotline. It is not at the White House and is run by the VA itself…..but it works…..24/7/365. They are professional, efficient, and your complaint shall be acted upon. The short coming if any is they will prompt a solution to your own personal particular problem but that does not seem to cause a cure of the root cause of the problem necessarily.
That phone number is 855-948-2311 and every Veteran or Care Taker of a Veteran. should have it on speed dial.
Be fair to the VA….give the locals every opportunity to fix the problem but when they cannot or will not…..then pick up the phone and make that phone call.
Be polite, professional, have all your documents, notes, and be able to lay out your case in detail and point out exactly what the problem is and what you see the best solution should be.
They send that complaint to the VA Secretary’s Office and there is a staff member who then dispatches that complaint to the proper authorities within the VA that have control of the facility or personnel involved.
Another note: If you obtain Emergency Care…..you or someone acting for you must notify the VA within 72 Hours of you receiving that care.
That phone number is 844-724-7842. You can also use the VA Website, va.gov and wade down through that mess to find the information as well.
Ralph, I mostly agree with your comments with the exception that my care from the VA has been very good. I’ve had a mix of in-patient, clinic, and community care that have been, for the most part, all excellent. The VA is definitely bureaucratic and, yes, sometimes getting an appoint can take time, but, generally I always been seen in a reasonable timeframe. My biggest complaint is with the administration of the VA C&P exams by outsiders and that if you are trying to get a rating change you have to depend on outside physicians to help establish the record. VA doctors, who have been treating you for several years, can’t attest to your condition. While I can understand the perception of a conflict, it does not serve the veteran well.
Is this legal and enforceable??
I am a California defector- believe me they will do whatever they can to dig their talons in to you. I work from home- have not set foot in California since 2015- and I still have to pay California income tax because I am 1099’d from a California based company. Hotel California is appropriately named- “You can check out any time you want, but you can n ever leave!”
scpatriot1956, you should ask the CA company to list your state on the 1099-NEC. If you did not set foot in CA to work you shouldn’t have to pay CA tax if you are self-employed in SC. I had a client who was self-employed in FL, worked for a company in SF and on her 1099 they put FL as the state.
FYI https://ttlc.intuit.com/community/state-taxes/discussion/do-i-have-to-pay-ca-state-tax-when-i-live-and-work-in-ma-but-do-remote-email-customer-service-for-a/00/2597032
They tried to get me on that also but I got out of it… probably because I had never physically worked in CA
Cut spending? Perish the thought. Exile a few million illegals? That’s racisss. Make the state business friendly? Too capitalistic! The tightest snares are the ones you set for yourself. California Here I Go!
The Golden State goes after the Golden Goose. The left taxes cigarettes because they understand that taxes are a disincentive, and they understand that tax breaks, like on “Green” energy, is an incentive, but they can’t grasp that this incentivization also works as a force multiplier for the decision to leave.
People leave NY, NJ, MA, and other high tax, bad weather states for low tax good weather states at increasing numbers, but when the state with the best weather can’t retain citizens it proves that it is all taxes and politics driving the exodus. Well I will also add that the high cost of housing is also at play. But of course liberal regulation and “green” policies add to the cost of housing too.
What is rather fun to watch is how states like NY, that have a governor that actually told people to leave, have shrinking tax bases which forces even higher taxes on those remaining and yet they can’t seem to grasp that this trend will ultimately be ruinous to their entire budget process.
One last thing: NY has about 19 million people and FL has about 22 million people and yet NY’s budget is TWICE that of Florida’s.
The democrats are parasites. They only have three tools…
Violence.
Tax.
Corruption.
What about regulation?
Senator Warren also wanted to tax businesses that moved to Massachusetts because they didn’t pay any previous taxes for example the infrastructure. Our paychecks are a crop to be harvested. Wake up!
California will be surprised to find how little authority it has over the residents of other states.
I’ve been saying for quit a while now that our paychecks are nothing more than a crop to be harvested.
Hotel California or Hotel Hell?
Senator Warren wants this on a national level.
Pietro, that was awesome!
Pull out now. Like your father should have.
You’re a real class act.
What’s a caterwauling, gorging, dependent parasite?