![]() The lost revenues due to the behavioral responses of taxpayers who stay in the state may be the greater danger. But more importantly, we see that out-migration might not even be the worst of California’s problems when it comes to the new wealth tax proposal. Our research does indeed find significant out-migration effects caused by tax rate increases, refuting the flawed findings of other research, and it also shows that departure rates for top earners are accelerating. While media coverage on the wealth tax bill, including this recent article in CalMatters, focuses on the potential for tax flight associated with such a proposal, the risks are often understated. The legality of such a provision is dubious at best, but that is not the only reason why a wealth tax should be a nonstarter in the Golden State. He wants wealthy taxpayers to continue sending money to Sacramento even after they have moved out of the state entirely. While most states are seeking to increase capital gains taxes or income taxes, assemblymember Lee’s bill goes one step further. ![]() Bills to increase taxes on the wealthy are circulating in seven other state legislatures as well. ![]() The proposal, Lee asserts, will raise $21.6 billion in revenues, but that is assuming the well will not run dry.Ĭalifornia is not the only state considering such a proposal. ![]() The latest proposal comes from state assemblymember Alex Lee, who is seeking to pass a new wealth tax that would impose a 1% annual tax on the wealth of individuals with net worth of $50 million or more and a 1.5% tax on the wealth of individuals with net worth totaling $1 billion or more. Lawmakers in Sacramento are once again considering going back to the well-that is, the state’s wealthy taxpayers-in search of even more money to fill their coffers. ![]()
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