Sen. Scott Wiener (D-San Francisco) announced Tuesday that he has authored legislation to put a wealth estate tax on the California ballot in 2020 in order to create a new tax for wealthy Californians. Wiener claims this new wealth tax is needed to equalize President Donald Trump’s tax reform to what existed before the federal tax break was created. However, Wiener also says “SB 378 directs all collected estate taxes to a newly created special fund: the Children’s Wealth and Opportunity Building Fund.”
An estate tax constitutes “double taxation” because it applies to assets that already have been taxed once as income.
“It’s obscene that the federal estate tax exemption has escalated so dramatically,” Wiener said. SB 378 is a gut-and-amend bill, which previously was a regulatory bill for the Barbering and Cosmetology Act.
The once-Golden State of opportunity and innovation already ranks 48th in the Tax Foundation’s 2018 State Business Tax Climate Index. California ranked 50th on individual income taxes; 41st in sales taxes; 32nd in corporate taxes, 13th in property taxes; 13th in Unemployment insurance taxes. This is notable because the “wealthy” are often small business owners.
SB 378: Redistribution of Wealth
“This new fund directs estate tax proceeds toward programs and services that directly address and alleviate socio-economic inequality and build assets among people who have historically lacked them, including helping low income children build wealth through savings accounts,” Wiener said in a press statement.
Wiener said his estate tax will have a “lower exemption rate of $3.5 million ($7 million for a married couple). The tax phases out at the current federal estate tax exemption — $11.4 million ($22.8 million for a married couple) – thus avoiding double taxation. SB 378 contains the same exemptions as the federal estate tax (e.g., transfers to a surviving spouse and family farm exemptions) and the same tax rate (40%).”
Wiener claims his scheme will avoid double taxation, ignoring that estate taxes apply to state assets that already have been taxed once as income.
“As the federal government has slashed the estate tax for wealthy families, working class and low income families — particularly black and Latino families — have struggled and have little or no wealth to pay for college, purchase a home, or otherwise invest in their future,” Wiener said. “A California estate tax benefits low income families by helping them build wealth and end the cycle of inter-generational poverty.”
What exactly are Californians getting for the already highest-in-the-nation taxes? California schools rank at the bottom of the country on test scores, the infrastructure is not maintained and deteriorating, roads and highways are ignored, the forests are not cleared of dead trees, gas tax revenue is used for social programs, we have the highest poverty in the nation and one-third of the nation’s welfare recipients, recreational pot is now legal, and Gov. Gavin Newsom has promised “guaranteed health care for all, a ‘Marshall Plan’ for affordable housing, a master plan for aging with dignity, a middle-class workforce strategy, a cradle-to-college promise for the next generation, and an all-hands approach to ending child poverty.”