"The proposed Billionaire Tax Act, imposing a one-time 5% tax on the total wealth of Californians whose net worth is $1 billion or more, needs reconsideration. Certainly, anyone with $1 billion (or more) has more than enough to live very comfortably, but there is an approach that would be less onerous to the billionaires and more helpful to the state. A one-time 5% tax would bring in a windfall for the state - once."
"Once again, we hear billionaires are fleeing California because of the possibility of a one-time 5% tax, but billionaires aren't moving to buggy, high-humidity states. They are moving their LLCs to Nevada for "more flexible tax planning." Buying a house in Florida doesn't mean moving your life there. It means counting days to be able to pretend you don't reside in California."
"They pay lawyers and accountants to avoid paying taxes even if paying the taxes would be cheaper. Zero tax is the goal. California taxes income, not unrealized wealth, which is why so much billionaire wealth escapes taxation. A temporary tax won't start an exodus. So no, California won't lose the billionaires. They aren't making California weather anywhere else. I don't care whether they enact this law or not - it won't make any difference."
The proposed Billionaire Tax Act would impose a one-time 5% tax on Californians with net worth of $1 billion or more. A one-time levy would produce a single windfall likely to be spent on short-term items and would not provide sustained benefits. An annual modest wealth tax, for example 0.5%, would generate steady revenue and avoid a sudden financial jolt to taxpayers. Many billionaires shift LLCs to low-tax states and use residency strategies to minimize state tax liability. Legal and accounting tax-avoidance services enable avoidance of taxes on unrealized wealth because California taxes income, not unrealized appreciation. A temporary tax is unlikely to trigger a mass exodus.
Read at The Mercury News
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