During the weekend, a new round of wealthy Californians, including Billionaire Jeffrey Gundlach, threatened to leave California should the new proposed wealth tax be passed, putting pressure on lawmakers who hope to pass the proposed bill next session.
Wealth tax proposals, wealthy Californians threaten to leave
The proposed bill, AB 2088, authored by Assemblyman Rob Bonta (D-Oakland), would raise taxes for the top .15% of earners in California, putting a .4% wealth tax on those who are worth more than $30 million or more and would apply the tax to residents for 10 years after they leave the state.
Another similar bill, AB 1253, authored by Assemblyman Miguel Santiago (D-Los Angeles), would raise the tax percentage to high-income earners from 13.3% to as much as 16.8%.
These proposals, as well as other factors such as wildfire threats, a continued economic shutdown, high living costs, and a Democratic controlled Assembly and Senate have made many prominent Californians consider leaving in recent months. Prominent conservative commentator Ben Shapiro has been the most well-known to leave, opting to move to Nashville earlier this year.
Others have only threatened to do so, with the wealth tax being the clear line in the sand. Industrialist Elon Musk, who earlier this year threatened to move Tesla Motors to Texas, still hasn’t ruled that out and is likely waiting on the result of the wealth tax votes. And during the weekend, bond fund manager Gundlach joined him.
“Elon Musk, Joe Rogan and Ben Shapiro, to name just a few, are leaving California to escape incompetent governance,” tweeted Gundlach during the weekend. “The ‘response’ from Sacramento? Wealth and massive income tax increases on job creators (AKA ‘the wealthy’).”
Elon Musk, Joe Rogan and Ben Shapiro, to name just a few, are leaving California to escape incompetent governance. The “response” from Sacramento? Wealth and massive income tax increases on job creators (AKA “the wealthy”). Should I align with 3 smart guys, or Sacramento? Hmmm.
— Jeffrey Gundlach (@TruthGundlach) September 26, 2020
Endangering a tax base, other states rivaling California on high taxes, politics, environment may keep people in state
“There are a lot of people leaving California, but up until this year it had been people who had been unable to afford the state or were upset with its policies,” demographics expert Ed Graves told the Globe. “Now California is endangering a large tax base.”
“California expects to get more from higher taxes, but would miss out on them if they left. They have that ten year tax part in there to scare people away, but honestly it may not even be enforceable, at least beyond one year.”
“Point is, wealthy people are beginning to look for the move, but it will likely create higher taxes wherever they go. Washington State increased taxes after a jump in population, as has New York City and Chicago. But they’re also causing population increases in cities, mainly in the Southeastern U.S., and taxes having been growing, if not skyrocketing, there. Texas has increasing taxes, as does Florida where sales taxes are expected to jump high this coming decade after years of having a lower population and votes against such a thing. Why do you thing so many elderly people are heading to Arizona, where, news flash, they are likely to go to an 8% rate soon and rival California for the highest tax rate in the Southwest.”
“Honestly, this is why this is a tough decision. As bad as California is, other states are rapidly approaching tax wise, as well as disaster-wise. Climate is a huge indicator of where people go, and as big a doomsday as people are saying about California, states like Texas are going to have it much worse in the near future. Hurricanes alone are going to hurt them badly. Florida is already seeing a large migration too.”
“As an MIT article recently said, California is almost uniquely equipped to deal with disasters in the future and could be a long-term safe spot.”
“So that just leaves political migration, and we’re seeing a huge shift right now. The Midwest is becoming more red and the South is trickling in blue. California has gone through big political shifts before, so, for Democrats, they need to worry about losing more lower-income voters fleeing the state, and Republicans need to worry about wealthier people leaving the state and people leaving because of politics.”
“Right now, we have been seeing people leave, but the state has a lot going for it. Why do you think the leaving rates have remained so low still besides people not being able to afford moving out? If the wealth tax is passed, that’s when you need to start worrying, because then you’re hurting the people giving the most. Otherwise, California will stay strong because, as bad as it is there, other states are rapidly moving up to the levels of things people left California to avoid in the first place.”
The new tax rate bills are expected to be debated on beginning late this year. Other wealthy Californians are expected to join in on pressuring lawmakers to keep the tax rate where it is in the coming months.
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