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‘Time Stealing’ Regulations for ‘The Wealth Tax’

The ‘time thieves’ of Sacramento: California Legislature lacks financial or economic literacy

By Edward Ring, August 17, 2020 1:14 pm

Can you imagine having to do an inventory and net worth calculation every year? Let alone potentially being audited and having to prove that values were not intentionally understated? It’s not only financial robbery, it’s time theft!  – Senator John Moorlach, Moorlach Update, August 14, 2020

What Senator Moorlach is referring to is Assembly Bill 2088, which will impose a wealth tax on Californians who have a net worth in excess of $30 million. Moorlach, who remains the only Certified Public Accountant in either house of the California State Legislature, knows what he’s talking about. There are many problems with a wealth tax. How to handle unrealized gains. How to value investments in fine art, or private equity.

Valuing privately held assets is a subjective exercise. That’s one of the reasons CalPERS and other pension funds are increasing their holdings of private equity. Hiding behind the opacity of assets whose true value is anybody’s guess, they can claim their investment portfolio is worth more. It’s also one of the reasons that imposing a wealth tax is a very bad idea.

There’s two issues here, both of which ought to concern all Californians. First, the necessarily byzantine mechanics of a wealth tax. As Moorlach states, implementing this tax would require every one of California’s roughly 30,000 wealthiest residents to continuously wonder if they’ll ever have to explain to an auditor how they arrived at the values they reported for everything they own.

Senator John Moorlach (Kevin Sanders for California Globe)
Senator John Moorlach (Photo: Kevin Sanders for California Globe)

The proposed wealth tax would be applied to everything a California resident owns, no matter where it is on earth. And this tax on worldwide wealth would be imposed on anyone who has ever lived in California for ten years or more, even if they don’t live in California any more. Moreover, if someone currently living in California moves elsewhere, they will still have to pay the tax.

The way this provision of the law would be applied are proposed as follows: Former residents of California will pay 100 percent of the wealth tax in the first year of assessment, then 90 percent of the tax in year two, 80 percent in year three, and so on. After paying 10 percent of the wealth tax in year ten, California’s former wealthy residents would finally be off the hook.

One might think that chasing California’s exiles down in other states to impose a wealth tax is unenforceable, but this underestimates the guile of these legislators. They’re almost certainly seeing the law as a precedent for other states to follow, with the goal of allocating a tax on wealth to all participating states proportionally to how long the targeted individuals have lived in each state.

To anyone who believes that such a law is not only unenforceable but infeasible, it may be suggested that they read the latest climate scoping plans issued by California’s Air Resources Board. Focus specifically on the “Cap-and-Trade Program” and imagine how this is being applied in practice. If California’s bureaucracy can embrace something as fraught with ambiguity and fertile for corruption as carbon emissions trading, they’ll try anything.

Which brings us to the second issue of concern. As Moorlach states, this is time theft. But when has any of the lawmakers controlling the California State Legislature cared about imposing time consuming mandates on their constituents? It is common for critics of California’s regulatory state to cite the hard costs associated with compliance, whether it’s to build a new housing development or hire and manage a workforce. But what about the time?

This is a problem that affects every business in California, and one which disproportionately impacts small business owners. They are forced to hire expensive professionals to navigate a virtual avalanche of applications and reports before they can build anything or manage anything. But large corporations in many respects benefit from an extreme regulatory environment because they know it wipes out their smaller competitors.

This is why the time thieves of Sacramento are allowed to exist. Whatever they come up with is going to reward those bureaucracies, public or private, that either have no competition or that know the presence of punitive levels of regulation will stifle competition. They can raise the prices for their products and services, taking advantage of captive markets, covering the costs and spending the time, knowing it is actually working to their advantage.

The lack of financial or economic literacy in California’s state legislature, much less experience in the private sector, is not news. But when the only CPA in their midst is outnumbered 119 to 1, and the dominant party holds a “mega-majority” (75 percent of all seats) in both the Assembly and the Senate, there is no way to enforce a reality check. But their insatiable desire for money from taxpayers too often overshadows the amount of time they demand from taxpayers.

Thanks to the time thieves of Sacramento, across the state, projects that would make life better for everyone are not attempted. Adding a room to a home, launching a small business, hiring employees, attempting a new trade or profession: why bother? By the time you’ve earned the certifications, endured multiple rounds of applications with multiple agencies, paid countless fees, most of them excessive – and knowing you could be stopped cold at any time – it’s not worth it.

The wealth tax has awakened opposition from unlikely sources; even the editorial board of the Los Angeles Times has weighed in against it. Maybe, just this once, this bad idea will die in committee. But the underlying problem is a governing class more interested in imposing processes on the governed, to feed their bureaucracy, instead of nurturing productivity. If the legislature were to change its priorities, perhaps state revenues would rise without taxing more wealth and stealing more time.

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9 thoughts on “‘Time Stealing’ Regulations for ‘The Wealth Tax’

  1. Comrades

    A slow slow redistribution is cruel…..get over it-

    A wealth tax for all, sorta like that Medicare for all…..eh?

  2. The wealth tax, like the income tax will be for all sooner rather than later. It won’t take long. California’s wealthy individuals and families do not have enough money to satisfy your political overlords, and with virtually open borders there are more underserved new americans in the dole line every day.

  3. Edward Ring, as usual, you have hit upon an under-discussed but extremely important aspect of what our “leadership” in California (and elsewhere) does to its citizens, that doesn’t involve just taking their money. Time-theft and all of its oppressive tentacles is like being put in a strait-jacket in a padded room when you are perfectly sane — it makes us dispirited, demoralized, unable to function and operate as those who live in a free country do, or are supposed to do, waiting and hoping that someone will come and unshackle us. But it never happens, it just gets more and more oppressive, which is apparently its real purpose.

  4. I always wondered why the very wealthy never worked together to rid the evil that rules over us. They have the money to put together elite Blackwater type security teams, with snipers. These people ruling over us should be sniped in the night. we can’t get the police or military to help us, they work for them. So we all continue to suffer under their unjust laws, rules and taxes. I guess we get what we deserve, because no one is willing to stand up to it. This latest round of tyranny in the disguise of a pandemic is all the proof you need to see how far gone the people are. Very few people are willing to stand up against a mask, let alone heavy handed taxation, censorship, forced vaccinations, the lockdown of our planet. It is now or never, the global reset button is going to be pushed in January. prepare to suffer.
    watch The Great Reset: Where do we go from here?

  5. AB 2088 would amount to taxation without representation. Ten years of taxes with no vote in California elections? Americans have never taken well to such tactics.

  6. This is all about the unions and the dwindling resources needed to support their retirement and benefits… Public service unions need to be outlawed and the pension fund needs to be given back to the people.

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