Paul McCauley, a liberal activist in California, is attempting to gather the nearly seven hundred thousand signatures necessary to place several initiatives on the 2010 ballot in the State.
McCauley’s initiative would include the following measures:
– Impose a one-time tax of 55% on property exceeding $20 million of a California resident or held in California by a nonresident
– Impove a tax of between 36.5% to 54.3% when a resident dies or leaves California
– Imposes additional 17.5% tax on total incomes of taxpayers with income exceeding $150,000 if single, or $250,000 if married
– Imposes an additional 35% tax if income exceeds $350,000 for a single person or $500,000 for a married couple
– Require the State to acquire shares of specified corporations to influence environmental policies and practices (for example, GM, Ford, ExxonMobil, etc.)
This man is looney. Why would anyone want to live in a State where these are the rules? They are basically saying that the American dream is now impossible. Once you are almost there, the government is going to step in and make sure you never get there – EVER.
First off, a 55% wealth tax? Bye-bye Hollywood. Under this rule, the Hollywood elite would have to cough up a lot of money.
Secondly, an exit/death tax? Couple this with the Federal Estate tax, and no one can financially afford to die. So much for leaving anything to your kids. Also, Joe CEO moves from San Francisco to New York and has to cough up at least 36.8 additional percent of both income and the unrealized appreciation he may have in asset that are valued in excess of $5 million. Remember, he is already paying 90%+. Apparently, McCauley put this in to prevent a mass exodus. Personally, I would prefer to pay the ~127% one time and be done with the lunacy then to pay a 90%+ marginal rate every year.
As far as the tax rates are concerned, when a producers existing Federal Income taxes, existing State Income taxes, payroll taxes and the many other taxes imposed, high producers will be lucky to net much of anything on their earnings. A self-employed individual could have a marginal tax rate in excess of 90%.
Keep in mind that these are the individuals that are producing. They are producing growth. They are producing jobs. They are the major driving forces behind the State economy. A tax like this just removes almost all of the incentive to do any of these things. Either they will move to another state or they will stop producing. It is that simple. Why work extra hours to make a measly 10% of your earnings when you could spend it with your friends and family?
The one thing is for certain, removing any and all rewards for producing and making more money will only do one thing – turn the high producers into takers, just like people like Paul McCauley.
For more information, you can read the following blogs:
TaxProf: California Ballot Initiative to Impose 45% Income Tax, 55% Wealth Tax & 36%-54% Exit Tax
Roth & Company: An 8.0 Earthquake Would Cause Less Damage
Tax Foundation: California Activist Proposes Wealth Tax and Probably Unconstitutional Exit Tax
Taxable Tax: An Exit Tax and a Wealth Tax for Californians?