This week the State of California revealed that it had validated sufficient signatures to place the proposed confiscation tax on the ballot this coming November. This means the likelihood the abusive tax will become law.
The tax was created by several economists seeking to generate more revenue for the State of California which already is home to the highest state taxes in the nation. Initially, the tax will target anyone who is worth over one billion dollars. As California is home to many big tech firms and founders, this could mean some of the biggest innovators in the state will find themselves in the cross hairs of the tax collector.
The proposal targets aggregate wealth so this would mean shares in a company, perhaps compelling an individual to sell some of these shares, to cover unrealized gains. It could also impact the control a founder holds on a company they created. The obtuse policy has already caused several high profile entrepreneurs to flee California.
While the proposal initially targets billionaires, it charts a path for expansion in the future, as California’s state spending continues to grow.
Successful Florida Governor, Ron DeSantis, stated on X yesterday, that “If and when this passes it will not be limited to billionaires. Once the camel’s nose is under the tent and government is empowered to confiscate property it will do so.”
California already has a state budget of a whopping $350 billion, the highest in the nation topping 2nd place New York at $220 billion
An article from earlier this year highlights the chronic deficit as revenues cannot cover the spending Governor Gavin Newsom and the legislature has approved.
There is an estimated multi-year deficit of between $20 billion to $35 billion annually due to fiscal mismanagement.
“These deficits are concerning for three reasons. First, after four years of projected deficits and a cumulative total of $125 billion in budget problems solved so far, the state’s negative fiscal situation is now chronic.”
Florida, on the other hand has a budget of $114.5 billion and is attempting to cut taxes – most prominently property taxes assessed on residents. Florida currently does not assess any state income tax unlike California.
Yes, the population of Florida is smaller at around 23.6 million compared to California’s 39.5 million but Florida is growing in population while California is declining.
Many of these people are voting with their feet and migrating to Florida.
While the California confiscation tax will certain cause additional wealth to flee the state it has been estimated that over $1 trillion in value has already left.
While the flawed confiscation tax may become the rule of California driving a larger wealth exodus perhaps a simpler approach would be to address the profound fraud that is undermining the state’s ability to operate.
From a failed high speed train project that has spent $15 billion with no trains in sight or the unemployment insurance system and Medi-Cal (California’s Medicaid program) where hundreds of billions have been pilfered from taxpayers, perhaps what California needs is a better government and leadership and not more taxes.
Meanwhile, Florid (and Texas, Tennessee etc.) are open for business.
