Posted on 08/27/2008 1:33:29 PM PDT by John Jorsett
Earlier this month, a California activist began gathering signatures to put a state wealth tax on the ballot. The measure would impose a new 35% income surtax (in addition to federal taxes and the existing 10.3% top state rate), and penalize people who leave the state by seizing 55% of assets exceeding $20 million. The money raised would be used to eliminate the state's budget deficit and for purchasing controlling shares in large corporations.
The 17.5% surtax is unusual because it would be on a taxpayer's total (not marginal) income whenever it exceeds $250,000, with another additional 17.5 percent tax on total income (for a total additional 35 percent tax) whenever it exceeds $500,000. In the case of single taxpayers or taxpayers filing as head of household, these additional taxes would be levied on incomes greater than $150,000 and $350,000 respectively.
So say someone has adjusted gross income of $1,000,000 and taxable income of $750,000. Today, their tax bill would be:
Federal Income Tax (35% top rate): |
$241,574 |
State Income Tax (9.3% top rate): |
$67,555 |
Payroll Taxes: |
$41,648 |
Total Income and Payroll Taxes: |
$350,777 |
Effective Tax Rate: |
35% |
With the new surtaxes, it would look like this:
Federal Income Tax (35% top rate): |
$241,574 |
State Income Tax (9.3% top rate): |
$67,555 |
Proposed Initiative Surtax (35%): |
$262,500 |
Payroll Taxes: |
$41,648 |
Total Income and Payroll Taxes: |
$613,278 |
Effective Tax Rate: |
61% |
The same person faces an effective tax rate of just 28% if they lived in neighboring Nevada. Being able to cut your taxes in half by moving to the next state over is probably not an incentive California wants to offer. Staying would also mean your tax bill going up by over 74 percent. Marginal rates this high would undoubtedly curtail capital formation, productive investment, and economic activity.
The initiative's sponsors have an answer to this too: hit people leaving with a hefty exit toll. The creatively named "Hasta La Vista Tax" of 36.8 percent is imposed when an individual dies or moves out of California. This exit tax would be on both recognized income and unrealized appreciation in asset values over $5 million. Since this tax inhibits commerce and burdens the right to travel, it is probably unconstitutional.
In addition, existing California residents who stay are hit with a one-time tax of 55 percent on assets in excess of $20 million.
Such enormous wealth and income taxes would probably be the best news Arizona and Nevada could get, because the exodus of capital and entrepreneurship will probably head their way.
The sponsor has until January 2, 2009 to gather the 694,354 signatures needed to place the initiative before California voters.
Exit tax. Sounds like a Communist country that doesn’t let people leave. Just tell them you are an illegal alien and you will be free to wire billions to Mexico no questions asked.
Holy cow! Even for California, this is out there!
If the really want to raise money, put a hefty surcharge on those who come there, especially illegal aliens.
They aren’t liberals. Call them what they really are, socialist despotic tyrants.
I should be so gracious...
I just don't talk about my list; it'd only get me banned.
If people are so DUMB, they should get TAXED!!
With some FReepers on here, we might get EMPEROR OMAMA!!
Sure. And I propose a 95% tax on the assets of all eggheads who agitate for higher taxes.
Unfortunately, these nutty ideas always start in CA and spread like wildfire.
“No socialists or communists need apply.”
That doesn’t leave many people form CA eligible.
I hope so, unless people in California and drive INTO the Pacific Ocean. I-10 runs from LA to JAX.
If there's any CONSERVATIVES in CA's state House and senate, they should speak out against this NUTCASE!! (Of course, maybe all conservatives left the state!)
Isnt ironic that this will hit the Hollywood types pretty hard with their expensive real estate that will become instantly worth less if just the petition is successful. The exit will start hard. What fool will wait for the vote?
The looters just wont learn that their plan cannot work in the long run. All producers either switch sides or flee. Soon no wealth is left to loot. Then the looters have to do each others laundry in hope of surviving.”
Straight out of Atlas Shrugged......
Straight out of the Soviet Union.
Does anyone in CA realize that another option is to reduce spending rather than raising taxes?
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Er, ah, um interesting concept but something this simple will never work in California. Only increases in spending can be considered (many of them automatic). Are you some kind of radical right winger or something? /s
Reading the text of the proposal, I now see two other issues that will get this canned. 1. The new revenues generated from it will be exempt from prop 98 funding. The teachers unions blitz the media any time any funding proposal comes up that cuts them off from their “fair share”. There is no way they’re going to let hundreds of billions in potential revenues slide by without a fight. 2. It looks like this raises taxes 10% + $1000 on EVERYONE in the state making over $23-odd thousand dollars a year. That’s a huge tax jump, and that alone will get it killed off. California may be full of liberals, but we’re also still the same state that pushed through prop 13 and we do NOT vote for direct tax hikes.
California, like Michigan, is being overwhelmed by welfare slobs and socialists. The productive citizens are out-numbered and need to leave before they are forcibly fitted for chains.
Quote
“Of the approximately $48 billion in accumulated budget shortfalls that the 29 states with projected deficits are facing, $33 billion, or two-thirds of the gap, is concentrated in those five states considered by corporate executives to be the least friendly to business [New York, California, New Jersey, Michigan and Massachusetts].
Are you sure that's not Bobby Lee from MadTV?
Come to think of it them driving into the Pacific doesn’t sound half bad.
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