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1.5% annual tax on all assets of Californians worth $1 billion or more, to take effect this year. There are 186 billionaires in California, 63 in the SFBA alone, with 629 individuals worth at least $100 mms.
1% annual tax on Californians with a net worth of $50 million or more by 2026. There are 3,182 of those.
https://www.kcra.com/article/california-ab-259-wealth-tax-hearing-this-week/46320616
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California – $250B State Budget
$68B in debt.
Wealth Tax $3-5B.One would think CA could find enough fat in the annual budget to get the same result as implementing a wealth tax. This will add more moving vans heading out of state.
https://www.msn.com/en-us/money/personalfinance/rich-californians-are-leaving-and-taking-their-tax-dollars-with-them/ar-AA1lXdDh -
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I just think they don’t know how to do math. Former Oakland Mayor Libby Schaaf is running for — get this — California State Treasurer. Because she did such a bang up job with Oakland’s finances.
Libby Schaaf, former Oakland mayor, announces 2026 run for California Treasurer
From August, 2023 “Unpacking Oakland’s $360 million shortfall.” Budget Deep Dive: Unpacking Oakland’s $360 Million Shortfall | KQED
From last week: “Is Oakland barreling toward another budget crisis?” Is Oakland barreling toward another budget crisis? (msn.com). The answer is yes, they spent more than they took in by $54 million, including 30.4% less from the Real Estate Transfer Tax, lowest since 2017/2018. They collected 15.8% less from the Transient Occupancy Tax, 83% less than license and permit fees. And the Oakland Police Department overspent by $32.32 million, largest by any department.
Oakland used federal and state pandemic funds to shore up revenue losses. Those won’t be available any more.
Oakland has been through the first quarter, ending 9/30/23. They project a revenue shortfall of $113 million…revenues of $773 million, and projected expenses of $903 million, resulting in a $129 million deficit more than twice this year’s deficit.
Under California state law, cities have to balance their budgets and can’t operate under a deficit. What will they do?
And the architect of all this wants to be our state Controller? The state with a structural $68 billion deficit? Makes my head hurt.
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Oakland does not have exclusivity here. Portland area agencies, schools, etc have a similar problem. Many took covid relief money and rather than banking it, established programs that would not be funded after bailout money dried up.
Evergreen school district (a small example) cut 140 jobs as Covid money expired. The district received in excess of $57M over 4 years, more than $40M for staff. $32M went to “Certifcated Staff”, whatever that is.
ESD is only one example, but there many others suffering budget shortfalls for the same reasons.
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Wealth tax is coming…
California Considers Controversial Wealth Tax to Address Insane Budget Deficit | Watch
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Being reported widely – 25% tax on unrealized capital gains for high net worth individuals. 44.6% capital gains tax on large capital gains. The war on private savings continues.
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Yikes. And this is happening as America is entering a broad slowdown…GDP only increased 1.6% it was announced yesterday (economists were expecting a 2.4% gain). Consumer spending increased just 2.5%, down from 3.3% last quarter and falling short of 3% expectations. At the same time, the personal consumption expenditure price index, key component of inflation, increased at 3.4%, biggest gain in a year. Core PCE prices rose at 3.7%, above the Fed’s 2.0% target.
Personal savings rate down to 3.6% from 4%, income rose 1.1%, down from 2%. Spending on big ticket items declined 1.2%
https://www.cnbc.com/2024/04/25/gdp-q1-2024-increased-at-a-1point6percent-rate.html
The federal funds rate is currently the highest in 23 years, though it hasn’t been hiked since last July.
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Not mine, Mick, as well you know.
I wouldn't give you two cents for all your fancy rules if, behind them, they didn't have a little bit of plain, ordinary, everyday kindness - yeah, and a little looking out for the other fella, too.
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Not mine, Mick, as well you know.
Too true, GR and Hurlburt is correct, the day of reckoning is coming. I posted that tongue-in-cheek.
GR’s method as originally outlined seemed feasible and desirable, but in the face of an $81 billion deficit in CA, and a
$29T, $30T,$31.46 trillion dollar U.S. national debt, the surgery will be done with a cleaver, not a scalpel; and by politicians, not economists or concerned citizens.Audaces fortuna iuvat
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I do think some kind of reckoning is coming both for our federal government’s budget and states such as California. My hobbyist economic thinking is that where revenue is needed consumption taxes will serve us far better than wealth or income taxes. I am sure there are flaws in my thinking; bottom line jumping to a big wealth tax really concerns me
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I went through 256 pages of Biden's new tax proposal.
Here is all you need to know:
— The Money Cruncher, CPA (@money_cruncher) May 1, 2024
Closing the paths to upward mobility and reducing the incentives to save for retirement (outside of Social Security).
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