Legislators Formally Introduce Wealth Tax

Legislators propose a constitutional amendment to allow a wealth tax and introduce a revised wealth tax proposal.

Assembly members Alex Lee, Miguel Santiago, and Lorena Gonzalez introduced ACA 8, a resolution to propose to voters a constitutional amendment that would authorize the legislature to impose a wealth tax. The amendment would:

• authorize the legislature to impose a property tax on any type of tangible personal property, shares of capital stock, evidences of indebtedness, and any interest in those items that are not exempt from taxation under the state Constitution.

• authorize the legislature to impose a tax upon all forms of tangible or intangible personal property or wealth.

• authorize the legislature to classify any form of personal property or wealth for differential taxation or for exemption by a majority vote.

• establish a task force on wealth tax administration to determine an adequate level of annual funding and staffing for the administration of a wealth tax.

• establish two continuously appropriated funds in the State Treasury to cover, for the first two years of collection, the expenses of administration and collection of the wealth tax.

• remove the limitation on appropriations of the state and of local governments until it is adjusted for the change in the cost of living and the change in population.

The legislators also amended AB 310 to change it from a public banks bill to a bill that would impose a tax of 1% on “worldwide net worth” on California residents with more than $50 million in net worth, or more than $25 million for married taxpayer filing separately. The bill would also impose an additional tax of 0.5% on worldwide net worth on California residents with more than $1 billion in net worth or more than $500 million for married taxpayer filing separately. Similar to earlier wealth tax proposals, it would exclude directly held real property or liabilities related to directly held real property from the definition of worldwide net worth. The bill would require a two-thirds approval of the legislature to pass and would take effect only if the voters approve the proposed ACA 8 constitutional amendment.

Earlier in March, Lee introduced the wealth tax proposal as the “California Tax on Extreme Wealth” with support from the California Federation of Teachers. The California Tax on Extreme Wealth follows last year's AB 2088, which would have imposed an additional 0.4 percent tax on net worth above $30 million or more than $15 million if married filing separately. Governor Gavin Newsom opposed that bill.