The Wealth Tax is Back
After multiple runs in the state legislature and a failed statewide ballot measure, the ever-popular ‘wealth tax’ proposal is back again in Sacramento.
In a recent article by columnist Dan Walters, he considers “Would ‘wealth taxes’ bring big bucks or spur exodus?”
The State of California currently holds the record for the “State with the Greatest Population Loss” as more than 500,000 people fled the state in 2022. Census data showed migration out of the state surpassed those coming into the state by more than 700,000 throughout the two-year period from April 2020-July 2022 according to the LA Times. California's major cities have been plagued with homelessness, crime, and skyrocketing housing costs, causing many residents to flee to nearby states like Utah, Nevada and even Texas. California residents own the highest income tax, sales tax, gas tax, second-highest capital gains tax rates in the nation. It begs the question, why doesn’t EVERYONE leave? Unfortunately, the residents of California that can least afford the tax increases are also the ones who can’t afford to move out of state.
Why does that matter? Because, in our state, the top 5% of income earners account for 70% of the personal income tax. This fact led the Governor to join with the Howard Jarvis Taxpayers Association and oppose Prop 30 in the 2022 election. The Governor knew that he would likely be facing a budget deficit going forward and losing any more high-earners would only exacerbate the budget shortfall.
In short, we tend to rely on an unpredictable source of revenue to fund our critical programs…