Before we get into this, check out the final chapter of The River over at Glibertarians.
Now then: California Assemblyman Alex Lee has proposed something truly stupid, even by the standards of the California government. Excerpt:
The proposal is, as a matter of economics, foolish beyond belief. In brief, the Democrats who have taken over the state now propose a “wealth tax” on the richest Californians, who are already fleeing the increasingly socialist state in alarming numbers.
A news story pretty much sums the coming disaster up:
Assemblyman Alex Lee, a progressive Democrat from San Jose, filed legislation that would tax an extra 1.5% on Californians with a worldwide net worth of more than $1 billion starting January of 2024, and 1% for those making more than $5o million starting in 2026.
Lee’s proposal aims to tax assets such as stocks and bonds that can skyrocket in value without incurring taxes until they’re sold. He said the tax would apply to the top 0.1% of California earners and could generate about $22 billion.
‘For far too long, we’ve allowed income inequality to deepen and fester in this state and this country while the rich get richer and the middle class shrinks behind,’ Lee said Monday.
The plan is both laughable and tragic because Californians have been fooled into thinking that having billionaires in your state is a bad thing. They do not understand that taxing wealth is taxing investment, and investment means jobs and incomes.
Here’s the onion:
But, as legal scholar Jonathan Turley notes, the proposed tax law is also deceptive, since it’s not really a “billionaire tax” at all.
“The law has a cynical bait-and-switch provision,” Turley writes. “The billionaire tax is just meant for the initial packaging and passage. It can therefore be sold as a ‘billionaire’s tax.’ However, in two years, the threshold drops to a worldwide net worth exceeding $50 million. While billionaires would stay at 1.5%, those in the lower tax bracket would be hit by a 1% added rate on worldwide assets.”
This is just staggeringly idiotic. Never mind the fact that this will cause a 1849 Gold Rush in reverse, as the last few productive people still living in the once-Golden state move their bank accounts offshore and flee the state for greener pastures. Never mind that California is sucking wind on the state budget, with unfunded liabilities totaling $1.6 trillion – yes, you read that right, a state that is in the hole for a bit over a trillion and a half dollars. Never mind that the state Assembly is already rheee-ing about the possibility of cutting spending.
What California is considering doing is quite literally killing the goose that lays the golden eggs, and they’ve been building up to this for decades. This isn’t the kind of stupid one just pops up with – this level of lunacy has to be nurtured over the course of a couple of generations.
There used to be a saying, “as goes California, so goes the nation.” Let’s hope the nation has retained a little more sanity than this – although, given the last few years, I won’t bet anything on it.