August 28, 2008

California Exit Tax Proposal Derided

by Joseph Henchman

Getting a good amount of attention this week is our blog post on a California initiative proposal to raise income taxes on high-income earners, impose a new wealth tax, and seize 55% of assets in an exit tax. We explained in that post why it is poor tax policy and partially unconstitutional.

Some of the blog who have commented on the proposal include:

• TaxProf Blog (with 67+ comments)
• Roth & Co ("An 8.0 earthquake would cause less damage. A Californian must really hate his state.")
• Taxable Talk ("Instead of increasing tax rates California needs to drastically cut tax rates. I don't see that happening yet that's the real solution to our budget crisis. Frankly, should Mr. McCauley's initiative get approved and be found constitutional (a very unlikely prospect), California would go bankrupt as any individual who has such high funds would leave the state (good luck to the FTB trying to collect such funds), venture capital would leave the state, and Arizona, Nevada, Oregon, and Colorado would find themselves with a lot more industry than they currently have.")
• Political Angst in America ("Here is a tax proposal that should drive even more people out of California in the unlikely event that it is approved by the voters.")
• Buckeye Blog ("Oh, my goodness. I wonder how much moolah Ohio could have raked in if it had arrested Howard Metzenbaum at the border on his way to Florida?[...] Until then, however, this isn’t a formula for tax collections. It’s a formula for poverty.")
• Directive 10-289 Watch ("Taxes were once predicated on the notion that if you live in a jurisdiction, then you should pay for the government services you receive while residing there. Now, taxes are also to be based on the services you will be not be receiving because you do not live in that jurisdiction. Wealth taxes, such as the estate tax and this proposed migration tax, are especially obscene in that the wealth that is being taxed has already been subjected to several underlying tax regimes: income taxes, sales taxes, property taxes. To suggest that such wealth should be subjected, one last time, to yet another tax — “just because” — reflects a public greed that swamps any example of private greed that has ever manifested itself.")
• Ace of Spades HQ ("That's where these people always wind up. They want to raise taxes to the skies. When confronted with the reality that if they do that, people will flee, they always respond, "Then we won't let them leave.")
• Periodic Ramblings of a CPA ("This man is looney. Why would anyone want to live in a State where these are the rules? They are basically saying that the American dream is now impossible. Once you are almost there, the government is going to step in and make sure you never get there.")
• Grief in Brief
• Reader Daniel O'Sullivan writes in to suggest that the tax be called the "Hotel California tax"—"you can check out but you can never leave."