Sunday, May 19, 2024
- Advertisment -
HomeNewsHow Does the Proposed California Wealth Tax Work?

How Does the Proposed California Wealth Tax Work?

- Top Ad -
How Does the Proposed California Wealth Tax Work?
Source: Pinterest

The proposed wealth tax for California was frowned upon by many. Therefore, people want to know why the government proposed it in the first place. Why do people oppose it, and how does it affect everyone countrywide? 

The Dreaded Wealth Tax

The Democrat-led wealth tax in California was supposed to create a tax for the state’s high earners. It was also a unique method for attorneys to fish out and discover people allegedly ducking their taxes.

The Dreaded Wealth Tax
Source: Pinterest

It places a tax imposition of 1.5% on the assets of Californians with a net worth of $1 billion. Furthermore, it places a 1% tax on those with a net worth of more than $50 million. 

- Inline 1-

Why Did They Propose the Wealth Tax?

There were three major reasons why they proposed this wealth tax. First, the state is low on funding. Therefore, they need more tax revenue. Second, many businesses have left California, making unemployment prominent. 

Why Did They Propose the Wealth Tax?
Source: Pinterest

Lastly, housing is a huge problem in the state. The housing prices are ridiculously expensive, and people cannot afford it. Therefore, a lot of people are now homeless. 

Who Does It Apply To?

This is a major problem with the wealth tax. It applies to people whose income is in the top 10% of the state. It also applies to full-time residents, part-time residents, and even those who have just recently left the state.

Who Does It Apply To?
Source: Pinterest

Without a doubt, these conditions are not favorable to a lot of people and people didn’t hide their concerns. 

- Inline 2-

Conditions for Part-time Residents 

As mentioned, this new bill does not apply to only full-time residents. It also applies to those living part-time in the state.

Conditions for Part-time Residents
Source: Pinterest

In this case, they will tax a certain share of their wealth based on how many days they spend in California annually. This does not favor the rich with luxury vacation homes in the state.

ALSO READ: Orange County Register Slams Alex Lee Over Controversial Tax Proposal

Conditions for Recent Departees 

Since rumors of this bill started flying around, many people have moved away from the state. However, if they pass this legislation, it will still affect them. 

- Inline 3 -
Conditions for Recent Departees
Source: Pinterest

This means anyone who falls under the wealth tax category trying to leave the state will still have to pay the taxes. Therefore, leaving is not a good solution in this case.

Assets the Wealth Tax Applies To

This wealth tax applies to every asset a rich person has. This includes artwork, offshore financial assets, shares one may hold in a partnership, and private equity interests.

Assets the Wealth Tax Applies To
Source: Pinterest

This tax is so thorough that it also applies to assets that the rich do not trade publicly. Therefore, this means that the government will have full access to even private businesses that aren’t located in California.

ALSO READ: Court Sentences Trump Tax Return Whistleblower to Five Years in Prison

Assets the Wealth Tax Does Not Apply To

In a surprising twist, the wealth tax doesn’t apply to real property. Therefore, it would encourage rich people to shift most of their investments into real estate.

Assets the Wealth Tax Does Not Apply To
Source: Pinterest

This may be because they are trying to favor Hollywood or other rich people who benefit democratic state officials. However, it might also be a move to improve the real estate conditions in the state. 

What Do They Expect It to Do?

The main objective of this wealth tax is to generate more funding for the state. If successful, they could raise up to $21.6 billion in revenue. However, this is still significantly less than half of the budget deficit. 

Tax advice
Source: Pinterest

In addition, it will not make up for the over $27 billion increase in Medicaid spending over the last four years. 

POLL—Should the Government Increase Taxes on the Wealthy To Reduce Economic Inequality?

Housing Problem and Wealth Tax 

One of the biggest problems that the wealth tax seeks to address is California’s housing problem. As one of the places with the highest number of billionaires in the country, it is also suffering from a huge homelessness crisis.

Housing Problem and Wealth Tax
Source: Pinterest

This is because real estate agents have increased house prices across the board, and the residents cannot afford it.

“Tax the Rich” Policy

Many believe that Democratic strongholds like California and New York are trying to ‘Tax the Rich.’ These states have tried to put several policies in place that will increase revenue for the government by taxing the rich and making them contribute towards internal revenue. 

“Tax the Rich” Policy
Source: Pinterest

However, this may backfire as some of their wealthy population may move away from those areas to more accommodating ones.

ALSO READ: Why Are Wealthy Californians Ditching the State for Arizona?

Hearing on Wealth Tax

The California legislature held a hearing on Wednesday, January 12th, regarding this proposed wealth tax. However, it didn’t go as planned, as more people were against it than for the notion. 

Hearing on Wealth Tax
Source: Pinterest

Republicans and Democrats rejected the bill and put it into a suspense file. This outcome was not unexpected because of the bill’s reactions before the hearing.

Rejection of Wealth Tax

According to several reports, the House Council rejected this legislation because it was somewhat half-baked and had unsavory far-reaching implications.

Rejection of Wealth Tax
Source: Pinterest

In addition, the public was strongly against the proposal. Therefore, it is on hold for now, and it is unlikely that the government will bring it up again anytime soon.

You Might Also Like:

Trump to Attend Manhattan DA’s Hush Money Case Hearing

SNL Star Colin Jost to Headline White House Correspondents’ 2024 Dinner

Judge Calls for Hearing on the Misconduct Allegations Leveled Against DA in Trump Election Case

Consumers Lament Increasing Hidden Restaurant Fees, Say They Are Getting Out of Hand

Talk Show Host Andy Cohen Reveals He Got Scammed in Sinister Scheme

- Bottom Ad -
RELATED ARTICLES
- Advertisment -
- Advertisment -

Most Popular