"You say this in a thread about Democrats wanting to tax the rich while your president is a paper billionaire backed by billionaires."

Gavin Newsome appears to not support this. I don't blame him.

I don't think that the drafters of this proposal understand that, if the billionaires opt not to stay, it will be their taxes that will need to go up.

"Which is why every bank corporation is formed in Delaware."

Can I hazard a guess that Delaware has benefitted from this phenomenon?

"But I also know Theil has most of his assets in non-qualified investments, like retirement accounts and real estate."

The tax would be on net wealth, to include unrealized capital gains. When I read through the language, it includes everything. As an accountant, you'd probably understand the difficulty in taxing 5% of everything of value. And for those heavy on investments, some would have to sell off assets just to cover the cost of the tax on unrealized capital gains. Peter Thiel would owe something like $1.35B over five years. I don't know that he has that sitting in M1 assets, or is able to draw that kind of income over the next five years.

And where it gets really weird, if he were obligated to sell off $1.35B of assets, would he then be hit with capital gains taxes on top of the wealth tax?

#57

The beginning of what? The end of the rich? They're already paying your fair share of the taxes...how do you think it benefits you if they go away?

It's easy to pass legislation that allows the government to take money from people. It's almost impossible to incentivize them to keep making money when the government keeps taking it. So I'll ask the question would CA be better or worse off without the billionaires currently paying taxes there. I'm sure there are upwards of 48 other states that would welcome them with open arms.

"No they aren't."

Yes they are

Would you rather have 13% of 60k, or 8.2% of $5M?

Your numbers also conflict with those posted by the IRS. I could post them yet again, but I don't think this time will be any different.

"It's easy to pass legislation that allows rich people to take money from government."

I don't see anyone in CA proposing "emergency" taxes on non-billionaires.

This is why VATs perform so well. They are evenly applied to all consumers, rich or poor. All income taxes do is disincentive go through the steps necessary to earn income.

"Which of those is the fair one?"

Fair?

The top 1% of income earners had an average tax rate of 26.09%. The bottom 50% had an average tax rate of 3.74%.

"That means it's regressive."

Yep. Those right-wing Europeans must be off their rockers for their expansive use of VATs

No idea what you mean by "perform so well." Perform what?

Tax revenue collection. Income taxes are basically voluntary. You generate it either through work or through profit. Either requires that resources be directed towards than income generation. But those resources could be used for other things as well. In a high, progressive tax environment, high income workers may choose instead to do something else with their time once they hit those higher tax brackets. When that happens, you lose both the tax dollars they would have generated, as well the services they were providing that the people were paying them for.

A few years ago, wasn't it California that wanted to tax unrealized capital gains on wealthy people leaving that state? Or was it a windfall tax if they left the state and made a lot of money in the new state. It was something like that...I just don't remember exactly.

#76

You've put this up before, but it's not a valid calculation of wealth. Investments are not M1 assets. You can't spend them. You would need to convert them into cash, and the cash value of those assets is always changing.

And I haven't seen it mentioned, but is CA going to provide refunds to billionaires if the value of their portfolios drops?

"Great. Replace it with a wealth tax then. That would be even more fair."

Like, how?

The value of one's assets, whether investments, or property, or cars, or TV sets, or whatever-it's always changing.

And over time, the tax would eat through the wealth until there was nothing left.

"I'll let you know if that ever happens."

It's happening now. That's literally what this article is about. You will be proven right if the tax goes into effect and no one leaves. But I think as an accountant, you've probably known quite a few people who have left CA.

"How about we start taxing the uber-wealthy who have, for the past 40 years..."

It's already happening.

"So... how do they tax houses?"

With assessments. They do the same for cars in some areas. But to assess everything? The TVs? The X-Boxes, the ski boats?

It might get a bit cumbersome.

"Well yeah, if you ignore the type of federal tax most workers (nearly 70%) pay more of than income taxes over their lifetimes."

Yup.

FICA taxes are the one tax you can't avoid, regardless of how rich or poor you are. It is the closest thing toa VAT the US has.

I'm sure there are more than a few people who over their lifetime paid only FICA on income taxes, with little to nothing going to Federal Income tax.

"But suddenly, all this doesn't this apply when the taxes asset switches to labor?"

Not usually. Labor income is accrued in cash, an M1 asset. Property and unrealized capital gains are not.

"And yet they keep getting richer."

It's easy to stop that from happening. CA is trying right now. I'm just not sure what it gains anyone. Other than maybe some people feel less jealously, and a little less like failures.

"And they're not going to work less, simply because of the tax rate."

I disagree. The first $130kish of my income is exempted as foreign-earned income. This allowed me to settle for a lower paying job than I would have wanted to do if I had moved back to the US. At least for me, low taxes had a significant role in my decision to stay in Germany.

"Well, there goes your theory."

Not really. I'll search around, but globally, the tipping point in effective tax rates is somewhere around 40%. Marginal rates can be higher if there are deductions that can bring the effective rate down. I'll try and find the article this came from.

"But should be, which is the point."

Why should they be? They already will be when and if they are sold and converted into M1 assets. Then they become realized capital gains. Is your suggestion, BTW, that capital gains shouldn't be taxed when realized, only when unrealized? Or should they always be taxed at every point in the lifecycle of the investment?

Property is already taxed by some states. As are cars.

"It's easy, and it's regressive, since a fixed tax rate means it costs you and me a greater slice of our respective pie compared to Elon Musk."

And, like Europe, I'm perfectly fine with that. We seemed to have figured out something you are unable to.

"So we could tax our rich people a whole lot more."

Maybe some, but this 40% also includes state taxes on income. Maybe a little bit more, probably not a whole lot more.

I think the highest income bracket in CA is 13.3%. And that to the 26% being paid in federal income taxes and you're at 39%.

"They get you on property taxes, sales taxes, business taxes, and excise taxes. Much like the other eight states without income taxes."

Yep. That's the nice thing about the US. It's something of a Chinese menu of tax options, depending on what is important to you as a taxpayer.