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A Democratic assemblyman from California defended his proposed wealth tax plan and argued that it will not actually cause an exodus of the rich from the state.
California State Assemblyman Rob Bonta was pressed by Fox Business Network anchor Neil Cavuto on his proposal which would reportedly still require that wealthy residents who escape the surtax to continue to pay taxes for up to ten years.
(Source: Fox Business)
While Bonta argued that the state’s wealthy population has grown and businesses are enjoying success, Cavuto repeatedly issued a reality check on the veritable “jailbreak” from the Golden State amid the rising taxes during the interview on “Cavuto: Coast to Coast” Friday.
The assemblyman explained his plan to institute a 0.4% wealth tax on California residents who are worth more than $30 million, telling Cavuto that the tax “affects about 0.15% of the California population — not the top 10%, not the top 1%, the top .15%, about 30,000 people.”
The Alameda Democrat also noted that the proposal will generate $7.5 billion in revenue, but he countered the Fox Business host’s question about the tax causing residents to begin “bolting” from the state.
“In California we’ve had taxes on millionaires in the past. We raised taxes in 2012 by 3% — and the number of millionaires and billionaires in California has grown. We have 25% of the nation’s billionaires, 17% of the millionaires, those numbers are up and we’ve grown to be the fifth-largest economy in the world,” he claimed. “So, while worthy of consideration it has not panned out.”
In a more eyebrow-raising component, Bonta explained that the “phased-in approach” for the proposal will assure the California government will continue to collect taxes from even those residents who leave the state.
“If you move in Year One, 90% of the tax bill applies…” he said, adding that the next year it would drop to 80% and continue each year until it reaches a zero level.
Cavuto was visibly stunned and quickly interjected to clarify.
“Wait, whoa, whoa, whoa, whoa…” Cavuto interrupted.”Are you saying that after they move, they’ve left, you are still taxing them? They’re no longer California residents, you can’t legally do that.”
“For ten years, the wealth was accumulated during their time in California … and that is what we’re proposing in our bill. We believe we can do that,” Bonta countered. “Certainly we’re open to dialogue and discussion as we move the bill forward, but we think it’s a sound approach and has a strong legal foundation.”
“Sounds like they’d be prisoners of California. They might hate it, they might hate getting screwed,” Cavuto quipped. “But you’re not letting them leave, you’re saying if you leave I’m still going to zoom you.”
The Democrat argued that the proposal recognizes that “wealth was accumulated over time in the state of California,” prompting Cavuto to ask what happens to those who made their fortunes while living in another state and decided to move to California.
“He or she arrives in your beautiful state and learns that that wealth is going to be taxed?” he asked, to which Bonta acknowledged that the same rule would apply.
“If I am one of those who knows that I’m a wealthy person moving to California and I know they’ve got this graduated plan, a wealth tax that’s going to start from the day I moved there, why the hell would I want to move there?” Cavuto asked.
The lawmaker went on to tout what Cavuto called the “lures” of the state, but the Fox Business host reminded him that the perks of living in the West Coast state have apparently “not been appealing enough” to keep “scores of companies” from leaving the state for the “safer confines” of locations like Texas and Florida.
“It hasn’t been just an exodus, it’s been a jailbreak,” Cavuto shot back.
“Look on the margins, some businesses may decide to leave, that’s their decision,” Bonta countered as Cavuto interjected, “they already have.”
“We have quite a few successful businesses in California, Neil, as you know,” Bonta continued. “Our [population of] millionaires and billionaires has grown, our economy has grown. I don’t think the image of folks fleeing has panned out, I don’t think it’s historically true.”
“You are representing that a little curiously,” Cavuto interrupted. “The millionaires and billionaires you talk about is over the course of time that people’s wealth has increased in California, as it has increased across the country.”
“So it’s a little disingenuous for you imply with that that here are people in just record numbers [saying] ‘I gotta be in California.’ There are plenty of other wonderful places for them to be,” Cavuto said, questioning whether the plan will just “boomerang” on the state.
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Frieda@bizpacreview.com
Originally from New York, Powers graduated from New York University and eventually made her way to sunny South Florida where she has been writing for the BizPacReview team since 2015.
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