California wealth tax could become first of its kind in the U.S.

Introduce income tax. Use the tax money to build infrastructure that allows for concentrated mega growth which kills off traditional economies and destroys thousands of years of crafting knowledge, and then introduce increasingly severe policies in order to manage the unexpected side-effects. The new policies create more side-effects and lead to more policies. Repeat Until you have so many laws and taxes are so high that the majority of people can’t compete in the economy because they can’t afford lawyers to navigate the law in the way the entrenched can, so they either start living off the government, or if their mental state didn’t survive the humiliating degradation of the whole process, they live on the street. New policies are introduced etc... The situation can’t continue. How does it end?

How are they proposing to account for someone&#x27;s networth, vs say things in family member&#x27;s name that they really own, or things in trusts that the person controls, etc?<p>I dont know how high end finance works, maybe its an already solved problem, but it seems a lot easier to define incoming income (which is already challenging) than it is to define net worth.

It is easy for a high net worth person to change primary residence. This is going to backfire and cause a reduction of revenue.

&gt; People subject to the wealth tax would report it to the Franchise Tax Board along with their income taxes. They would have to report all assets including stock in publicly and privately traded corporations...<p>Does this mean that if you have paper wealth in the form of illiquid founder shares in a startup, you&#x27;d be subject to the wealth tax? There&#x27;s a nontrivial number of people that have more than &quot;$30M&quot; in stock in their name, but that wealth only exists on paper.<p>If you are a co-founder with 20% ownership of a $500M company, that&#x27;s an extra $280k a year of personal taxes even if your company doesn&#x27;t make it to an exit.<p>This could kill the startup industry.

&gt; The tax rate would be 0.4% of net worth<p>Rich people have most of their net worth in assets afaik.<p>So, even &quot;just&quot; 0.4% of the net worth would be quite severe. Add to that, that the stocks of certain companies are inflated atm due to corona, they would have way more &quot;net worth&quot; than usual. So if they have to pay taxes on the inflated price and then the price falls they are gonna lose quite a bit of money.<p>If they can&#x27;t cover it with liquid assets they would have to sell other assets at a, probably, below market rate.<p>This is gonna backfire so very hard.

America has had a form of wealth tax for a very long time now, but oddly only applied to real estate (property tax), this isn&#x27;t as Weird as it sounds, nor is it a novel idea - many countries have a wealth tax.

I love this state but man, it is so hard to start a company when you&#x27;re poor. The FTB alone will gut you, and god forbid you&#x27;re just a tiny Etsy shop trying to grow. You really can&#x27;t afford to try to make more money on the side when you&#x27;re poor unless it&#x27;s slaving away in the gig economy.<p>I wish there was a threshold of ARR that you can stay under and not have to pay the FTB fees. That would really help tiny businesses.

Dreamt up by the same people that retroactively increased income tax in 2012?<p>Every time CA’s pension funds look shaky, why not just go back to 2012 and bump the rate again for that year, but only if your income is over $99M and your surname is Zuckerberg.<p>I don’t condone the practice at all. I think it’s shameful behavior from the state — I remember at the time it felt pretty scurrilous that CA were targeting Zuckerberg et al, albeit quite passively.

I see more dark times ahead for California. If more of the tech industry allows permanent remote work, I have a feeling many of those highly paid jobs will go elsewhere. California gets a large chunk of its budget from income tax.

Of course it exempts real estate...