Leave it to California to sap the wealth from the successful. You can add New York, Illinois, Maryland, Hawaii, Minnesota, Connecticut, and Washington to the list too. You know from my Super States ranking where your money will be treated with more respect than it is by these money grabbers.
I’ve never been a fan of letting taxes wag the dog but what we’re seeing is more than taxes, it’s about taking away your freedom. Now politicians in California want to emulate the famous Eagles tune, “Hotel California,” and not allow even those who leave the state to escape its draconian taxation.
California, and other states listed above, are working together to form a “tax alliance” that will harass wealthy Americans no matter where they live. So even if you check out of one of these states, you can never leave its taxes behind. The Wall Street Journal’s editorial board explains:
Democrats finally have a strategy to stop billionaires from fleeing high tax states: Block the escape routes. That’s the logic behind coordinated moves in progressive states to tax wealth. The reforms aren’t likely to pass immediately, but they illustrate the increasingly open socialist goals of progressives and their public-union backers.
The confiscatory tax alliance emerged late last week when lawmakers from eight states unveiled plans to target wealthy residents. California, New York, Illinois, Maryland, Hawaii, Minnesota, Connecticut and Washington state are all represented, and several of the sponsors have already released bills. “We are here today to put billionaires and multimillionaires on notice,” said Washington state Sen. Noel Frame on a Zoom call. “They will pay what they owe.”
The taxes are branded as levies on wealth, but they vary in form. Some resemble Sen. Elizabeth Warren’s outline from 2021 and would cut out a slice from large asset holdings each year regardless of whether they grew in value. That includes California, which would take 1% a year from households worth more than $50 million and 1.5% from those worth more than $1 billion. This is a grab for the fortunes of tech entrepreneurs who have already filled Sacramento’s coffers with payments on income and capital gains.
The California bill would also require taxpayers with illiquid assets to file yearly reports on their holdings and eventually pay the tax, even if they move out of state. Communist China doesn’t even do that. The Eagles were ahead of their time when they wrote “Hotel California”: You can check out any time you like, but you can never leave.
The Illinois plan would treat billionaires’ unrealized capital gains as income, taxed at 4.95%. The targets would have to pay the levy whether or not they sold the assets being taxed, though the author hasn’t mentioned a comparable deduction for capital losses.
“We want to send a message that there is nowhere to hide,” state Rep. Will Guzzardi told the press last week about the interstate effort. Illinois Democrats must still be fuming over the departure of hedge-fund founder Ken Griffin last year, along with his $200 million in annual state taxes.
Action Line: If you are living in one of the states preparing to tax your wealth, there’s never been a better time to look for a better America. Begin your search with my 2022 Super States, and click here to be one of the first to receive my list of 2023 Super States.
E.J. Smith - Your Survival Guy
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