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>The state also intends to make this [wealth tax] law follow you for up to a decade should you leave. Clever politicians? Maybe, but just how will they convince

by daenz 6y ago

>The state also intends to make this [wealth tax] law follow you for up to a decade should you leave. Clever politicians? Maybe, but just how will they convince other states to cooperate once you relocate? Not to mention whether this future provision is constitutional. Holy smokes, politicians are trying to extract a state wealth tax on individuals after they leave the state? Am I reading this correctly?

ganoushoreilly 6y ago
Yes they are very serious. But good luck getting any states to go along with that. It's a crazy amount of lawsuits awaiting to happen. Instead they should address why people are leaving.. Maybe.. just Maybe.. it's the knee jerk policies being put in place that will do more economic harm than good.
- jjeaff 6y ago
  Why would states need to be ok with it? California is already able to levy the bank accounts of people who have never set foot in the state if they deem that you owe them tax money. I see no reason that any state would stick it's neck out to protect any individual transplants.
rayiner 6y ago
That’s not totally crazy. You probably couldn’t have earned that wealth in another state, so why shouldn’t California take its cut?
- Judgmentality 6y ago
  Because they already did with the taxes that already exist?
  - deleted 6y ago
    [deleted]
- thaumasiotes 6y ago
  That would be the concept of an "income tax".
- koheripbal 6y ago
  This is a WEALTH tax. You could have earned that money at any other time in your life, anywhere in the world.
dodobirdlord 6y ago
Not totally off the wall, given that states already will pursue you about income tax that you owe if you leave the state. If the tax were framed as accruing an obligation that is paid off in installments over the next 10 years, then presumably it would pass muster than an individual would owe for the next 9 years after having spent a year in California, even if they then went elsewhere. I don't know how such a tax would be written that it didn't somehow overlap though. Perhaps imposing a yearly tax that is "0.4% of wealth each year over the next 10 years" but capping the total applicable wealth tax payable each year to "0.4%"? This would be a really weird looking law...
rachelbythebay 6y ago
Talk to anyone who got RSUs while working for a company in CA and then moved somewhere else (Seattle in particular is popular). CA wants their chunk of flesh no matter what.
calebm 6y ago
It's Hotel California: "You can check out any time you like But you can never leave!"
mark212 6y ago
I’ve heard from Canadian friends that this exists for Canadian residents who want to move out of the country. At an almost confiscatory rate too. But as I note in another comment, AB 2088 didn’t even get a vote in committee so it’s hardly a serious policy proposal at this point. The author is building straw men and knocking them down at a furious rate.
- bonestamp2 6y ago
  > this exists for Canadian residents who want to move out of the country Not that I'm aware of. We hired a big fancy consulting company to figure out the tax laws when we moved from Canada to the US. We found that it does exist for US Citizens though. If a US citizen leaves the US, they will (basically) never get a lower tax rate because they will always owe the difference back to the US government. This is to prevent people from pretending to move to tax haven countries while still basically living in the US.
  - mark212 6y ago
    My information is 15+ years old and maybe they changed it. or maybe it’s Canadian citizens and not just residents. And yes the US is only one of two countries in the world that taxes income earned abroad by its citizens. Can be incredibly burdensome in some situations.
pmoriarty 6y ago
"The state also intends to make this [wealth tax] law follow you for up to a decade should you leave." I'm not up on the current law, but this is how the IRS used to treat people over a certain net worth who renounced their US citizenship. The IRS would assume these individuals did it for tax evasion purposes and continue to tax them for 10 years afterwards.
- bonestamp2 6y ago
  And if you don't renounce your US citizenship, you pay the difference in tax savings to the US government forever, even if you don't live here anymore. Top of this page: https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad https://www.irs.gov/individuals/international-taxpayers/us-c...
bonestamp2 6y ago
I do find it egregious, but it's not that unique... the federal government does the same thing if a US Citizen moves out of the country: https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad https://www.irs.gov/individuals/international-taxpayers/us-c...
- thu2111 6y ago
  Note though, that this rule is unique to (last I heard) USA and Eritrea. Eritrea of course has no infrastructure to enforce such a rule, but via FATCA the USA does. So it actually is basically unique in the world.
GaryNumanVevo 6y ago
yeah, it's a hell of a lot easier to go after individuals for taxes when most FANG companies are "headquartered" in the tax-haven de-jour.

by daenz 6y ago

ganoushoreilly 6y ago

Yes they are very serious. But good luck getting any states to go along with that. It's a crazy amount of lawsuits awaiting to happen. Instead they should address why people are leaving.. Maybe.. just Maybe.. it's the knee jerk policies being put in place that will do more economic harm than good.

jjeaff 6y ago
Why would states need to be ok with it? California is already able to levy the bank accounts of people who have never set foot in the state if they deem that you owe them tax money. I see no reason that any state would stick it's neck out to protect any individual transplants.

rayiner 6y ago

That’s not totally crazy. You probably couldn’t have earned that wealth in another state, so why shouldn’t California take its cut?

Judgmentality 6y ago
Because they already did with the taxes that already exist?
- deleted 6y ago
  [deleted]
thaumasiotes 6y ago
That would be the concept of an "income tax".
koheripbal 6y ago
This is a WEALTH tax. You could have earned that money at any other time in your life, anywhere in the world.

dodobirdlord 6y ago

Not totally off the wall, given that states already will pursue you about income tax that you owe if you leave the state. If the tax were framed as accruing an obligation that is paid off in installments over the next 10 years, then presumably it would pass muster than an individual would owe for the next 9 years after having spent a year in California, even if they then went elsewhere. I don't know how such a tax would be written that it didn't somehow overlap though. Perhaps imposing a yearly tax that is "0.4% of wealth each year over the next 10 years" but capping the total applicable wealth tax payable each year to "0.4%"? This would be a really weird looking law...

rachelbythebay 6y ago

Talk to anyone who got RSUs while working for a company in CA and then moved somewhere else (Seattle in particular is popular). CA wants their chunk of flesh no matter what.

calebm 6y ago

It's Hotel California: "You can check out any time you like But you can never leave!"

mark212 6y ago

I’ve heard from Canadian friends that this exists for Canadian residents who want to move out of the country. At an almost confiscatory rate too. But as I note in another comment, AB 2088 didn’t even get a vote in committee so it’s hardly a serious policy proposal at this point. The author is building straw men and knocking them down at a furious rate.

bonestamp2 6y ago
> this exists for Canadian residents who want to move out of the country Not that I'm aware of. We hired a big fancy consulting company to figure out the tax laws when we moved from Canada to the US. We found that it does exist for US Citizens though. If a US citizen leaves the US, they will (basically) never get a lower tax rate because they will always owe the difference back to the US government. This is to prevent people from pretending to move to tax haven countries while still basically living in the US.
- mark212 6y ago
  My information is 15+ years old and maybe they changed it. or maybe it’s Canadian citizens and not just residents. And yes the US is only one of two countries in the world that taxes income earned abroad by its citizens. Can be incredibly burdensome in some situations.

pmoriarty 6y ago

"The state also intends to make this [wealth tax] law follow you for up to a decade should you leave." I'm not up on the current law, but this is how the IRS used to treat people over a certain net worth who renounced their US citizenship. The IRS would assume these individuals did it for tax evasion purposes and continue to tax them for 10 years afterwards.

bonestamp2 6y ago
And if you don't renounce your US citizenship, you pay the difference in tax savings to the US government forever, even if you don't live here anymore. Top of this page: https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad https://www.irs.gov/individuals/international-taxpayers/us-c...

bonestamp2 6y ago

I do find it egregious, but it's not that unique... the federal government does the same thing if a US Citizen moves out of the country: https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad https://www.irs.gov/individuals/international-taxpayers/us-c...

thu2111 6y ago
Note though, that this rule is unique to (last I heard) USA and Eritrea. Eritrea of course has no infrastructure to enforce such a rule, but via FATCA the USA does. So it actually is basically unique in the world.

GaryNumanVevo 6y ago

yeah, it's a hell of a lot easier to go after individuals for taxes when most FANG companies are "headquartered" in the tax-haven de-jour.