California Billionaire Tax – the Real Winners

The pending California billionaire tax is poorly designed for the claimed intent of financing health care and education in many ways. One of those ways has yet to be mentioned by those seeking to put it on the ballot or those opposed. That is the real beneficiaries of a California Billionaire Tax, expanded bureaucracy and legal bottom feeders.  

Problem:

Since the Billionaire Tax values “all forms of personal property and wealth,” everything the “billionaire” owns, who assigns those values? Just logging all tangible assets of my middle class friends with book or antique collections of furniture, vintage clothing, or tools, could run into hundreds of hours, and then there would be additional hundreds of hours to assign a fair value to each item.

Is that magazine for a US Army World War II experimental machinegun worth five dollars or five thousand dollars? 

This ballot measure assures full employment for attorneys that will specialize in minutiae of asset valuations, as the Franchise Tax Board and their victims dispute details.

On many things, government value appraisers will be guessing to assign values, potentially opening up years of litigation just to establish real values. The cost of that litigation is in fact an additional “tax” upon the individual taxpayer.

Many things are so rare that there is no established market to assign values. If something is sold for less than what the government assigned value, there will be no tax refund – the taxpayer is just ripped off by the state government.   

That problem is hugely worse for the very wealthy. Those assigned values could then be challenged by the massive new bureaucracy, unmentioned, but required to administer a Billionaire Tax, and the hundreds of new government attorneys required for those created challenges. 

Remember, items purchased by the super-rich were paid for by income that has already been taxed by the State of California. Therefore, much of the Billionaire Tax is in fact double taxation. How many times can it be called “fair” to tax the same money? 

The actual Billionaire Tax financial impact is not just the revenue realized by government, but a massive additional cost to each individual just to assess just what that tax payment should be, as each individual will be forced to employ an army of appraisers, accountants, and tax attorneys. In reality, that is an additional “tax” upon the taxpayer.

‘Unrealized profits’

“Unrealized profits” as a wealth gauge is a treacherous field, as the tax can be assessed on asset valuations inflated for various reasons when that full amount cannot be realized from an asset sale to pay the tax. Unrealized profits are “paper profits,” frequently highly volatile, the value varying day to day.     

The Billionaire Tax seeks to place a stock value on an arbitrary date, and then tax that amount regardless of the value when the tax is actually paid, or the money realized when stock is sold. In fact, the very act of a company founder selling a major block of stock, even if it is to pay a tax bill, frequently depresses the value of the stock, making the actual “tax” higher than the originally assessed value.

Slimeballs

Will the Billionaire Tax also open the market for slimeball attorneys to file private Attorney General actions (PAGA) challenging valuations set by the taxpayer, seeking to get a percentage of the increased tax assessment? That type of lawsuit has made some very questionable attorneys rich off of filing such lawsuits against small businesses for violations of disability law as minor as a mirror being less than an inch too high.     

Wealth Tax Experience:

Further, a number of European countries have tried and dropped wealth taxes, primarily due to capital flight, high administrative costs, and very low revenues actually received. That list includes Ireland, Austria, Germany, Denmark, Sweden, and more.  

The Real Winners:

The real winners of a California Billionaire Tax are those denizens of the massive new bureaucracy, appraisers, accountants, and private attorney general action types preying upon the carcass of the Billionaire Tax victim.