Written by Julianne Foster
AB 2088, the new California “Wealth Tax” bill proposed by Democrat Assemblyman Rob Bonta effectively turns those who wish to escape the high taxes of California into prisoners.
Amid the economic crisis caused by COVID-19 and Gov. Newsom’s poor decisions, Bonta argues that this new bill will use money from millionaires to support those in financial hardships. “Families are hurting right now. COVID-19 has only made matters worse,” Bonta said. “In times of crisis, all Californians must step up and contribute their fair share. Asking these well-resourced Californians to give a little more to keep our people working and support our most vulnerable is the right thing to do.”
The bill applies a 0.4% tax on the net worth of those worth over $30 million, which makes up around 30,400 Californians. A surge of 1% is added to net worths between $1-2 million, 3% on incomes between $2-5 million, 3.5% on income greater than $5 million. All of this would supposedly result in approximately $7.5 billion more in state revenue annually.
An introduction statement in the bill reads: “For the benefit of accumulating excessive wealth in this state.” Because California has 25% of the nation’s billionaires and 17% of the nation’s millionaires, this tax could ostensibly benefit struggling Californians greatly, however with the state’s trend in handling taxpayer funds in an untrustworthy manner, it isn’t clear that the “right” groups will receive any of this money. The economy needs to be reopened so people can control their own incomes and take care of themselves, rather than relying on the state’s extortion of successful Californians for help.
Bonta says millionaires who want to “invest in the common good,” such as George Soros and Abigail Disney, have publicly asked for the state to tax them more. In an interview with Fox Business anchor Neil Cavuto, Cavuto argued that the tax may drive people out of the state as there are many other beautiful places for them to live. Bonta is convinced that this tax will not push anyone away because “it’s California.” For those who try to leave, Bonta is working to ensure they can’t escape the tax for another 10 years after they move.
Those who move out of state will have to pay 90% of the tax in the first year, 80% of the tax in the second year and so on until they are phased out over the next 10 years. Bonta sees this as a “sound approach” and legally permissible since those who move out of state generated their money from living in California. Cavuto raised concerns about those who move to the state with their wealth and then want to leave due to the high taxes, however Bonta didn’t specifically address this situation and only said that those who move to the state with their wealth would have 10 years to be phased in, rather than be hit with it all on the first day.
Even Gov. Newsom seems hesitant to support this bill since such a heavy wealth tax is a “national construct” and on a state level could affect “your ability to retain and attract talent, individuals, companies, and your competitiveness.”
