California Democrats consider wealth tax — including for people who moved out of state California lawmakers are pushing legislation that would impose a new tax on the state's wealthiest residents — even if they've already moved to another part of the country. Assemblyman Alex Lee, a progressive Democrat, last week introduced a bill in the California State Legislature that would impose an extra annual 1.5% tax on those with a "worldwide net worth" above $1 billion, starting as early as January 2024. As early as 2026, the threshold for being taxed would drop: those with a worldwide net worth exceeding $50 million would be hit with a 1% annual tax on wealth, while billionaires would still be taxed 1.5%. Exit taxes aren't new in California. But this bill also includes provisions to create contractual claims tied to the assets of a wealthy taxpayer who doesn't have the cash to pay their annual wealth tax bill because most of their assets aren't easily turned into cash. This claim would require the taxpayer to make annual filings with California's Franchise Tax Board and eventually pay the wealth taxes owed, even if they've moved to another state. California was one of several blue states last week to unveil bills to impose new wealth taxes. The other states were Connecticut, Hawaii, Illinois, Maryland, Minnesota, New York and Washington. Each state's proposal contained a different tax approach, but they all centered around the same basic idea: the rich must pay more.
Taxing residents "years after they left the state" on worldwide income would never survive a challenge in court. Its really that simple. And you're going after the folks that have the means and wherewithal to defend against that action ($50M or more). No chance in hell of it doing anything.
I'd like to know how Cali sees this working. Are they going to use their giant economic dick to force extraditions from non-compliant red states? I mean, the US does it worldwide so why not. Can never see it surviving SCOTUS tho
It's probably a little heavier discussion than I can get into right now but - as a quick hit and run- I will say that it poses constitutional issues. The constitution guarantees the right to move interstate without penalties by states. The lefties can argue that it just hits big income types but that should not matter. They will apply it next to corporations and businesses that move out. I think a state has a right to recover certain investments, start-up incentives etc that they may have given a company moves out but that is different than a penalty tax. ==== The U.S. Supreme Court in Crandall v. Nevada, 73 U.S. 35 (1868) declared that freedom of movement is a fundamental right and therefore a state cannot inhibit people from leaving the state by taxing them.