Wealth Tax Fails to Advance out of Committee

The proposed wealth tax, known as the “California Tax on Extreme Wealth,” failed to advance out of committee by the April 30 deadline to report fiscal bills to fiscal committees. AB 310 would have imposed 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 have imposed 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 have excluded directly held real property or liabilities related to directly held real property from the definition of worldwide net worth.

A California wealth tax is likely to be revived in the next session, however. Political complications around the recall election have stifled efforts to impose new taxes in the current session. Also, AB 310 required the passage of ACA 8, a resolution to propose to voters a constitutional amendment that would authorize the legislature to impose a wealth tax. If ACA 8 passes, the tax would likely be reintroduced next year.