New California wealth tax proposal raises taxes on total net worth of wealthy California residences. But, what if they decide to leave the State? No problem.
Economic impacts: Will ultra-wealthy CA residents leave the state? As mentioned above, the California share of all US millionaires and billionaires has increased over the last decade in spite of the 2012 high income surtax. Therefore, we are still far from a tipping point. The wealth tax bill is also structured in such a way CA wealthy residents who leave still have to pay the extreme wealth tax on a fraction of their wealth for up to 10 years: they pay tax on 90% of their wealth the year after they leave, on 80% 2 years after they’ve left, .. , on 10% 9 years after they’ve left, 0% 10 years or more after they’ve left. The logic is that wealth is the fortune you built over a lifetime and hence a wealth tax requires looking beyond the current year. This makes the wealth tax much harder to avoid than the income tax (where you are no longer liable after leaving the state).
