In California, the Democrats’ Jihad against the rich is gaining momentum. In 2019 they will try (again) to pass a bill to in essence ban “venture capitalists, hedge funds and private equity firms” from the Golden State. If implemented, the plan will work all too well. Boy, will it ever!
What some Democrats have figured out is that if you don’t want something but can’t directly ban it, tax it out of existence. For instance, if you don’t like guns in private hands, tax the guns, tax the ammo, and require annual fees for even possessing such items. Make those costs high enough, and it will effectively ban most guns in California — except for the rich. Most LEGAL guns, that is.
Intentional or not, that’s apparently what Democrat legislators will try to accomplish in 2019. Their 2018 bill (AB-2731) failed to pass. The bill would have levied a breathtaking ADDITIONAL 17% state individual income tax on certain evil activities — any income derived from “venture capitalists, hedge funds and private equity firms.”
This vindictive levy would have brought the total CA income tax rate for such rich folks to over 30%. And it would not be deductible on the individuals’ federal income tax. The total net federal and state tax rate on these (perceived) robber barons would be over 67% — two out of every three dollars earned would go to government.
The CA 30.3% state income tax rate would be almost as high at the new 37% top federal income tax rate. Gosh, is it possible that some of these wealthy business people will then establish their “tax residence” in another state?
The “soak the rich” crowd now completely controls California. All significant roadblocks are gone. In January, both state legislative branches will have not just a veto-proof 2/3 majority but actually a THREE-FOURTHS majority. Jerry Brown, the semi, sorta rational governor will be gone — replaced by a doctrinaire socialist who clearly wants provide free health care and college education for all. Such new giveaways will absolutely HAVE to be accompanied by massive state tax increases. We Californians will indeed live in interesting times.
The bill failed in 2018, but talk is that the Democrats want to try again in 2019 with their much bigger supermajority legislative advantage. The money is “for the children” (education), so it has the enthusiastic support of the state’s powerful teacher unions — who understand who the money is REALLY for.
One problem that has plagued California progressives is that — when it comes to “income inequality” — California is one of the worst states. This is measured by the Gini coefficient — the Left’s gold standard to measure income inequality.
Our “Workers’ Paradise” is the 3rd worst income inequality state in the nation in a 2015 U.S. Census Bureau survey. When it comes to “a state of haves and have-nots,” California shows how it’s done Hollywood style. https://www.census.gov/content/dam/Census/library/publications/2016/demo/acsbr15-02.pdf
The way a sensible liberal would approach this inequality problem would be to try to raise the earnings of the poor and blue collar folks. But in California, apparently the approach will be to instead drive the rich out of the Golden State. And yes, that WOULD improve the Gini coefficient figure. Indeed, if everyone is equally poor, then the Gini coefficient is perfect — the progressives’ dream come true.
Below is a summary of this measure. Already there is a study pointing out how idiotic this bill is. But it’s questionable whether or not our central planners in Sacramento can see the folly of their plan.
Let me close on a positive note. I think the plan will NOT pass. Cooler heads will prevail. Major progressive California corporations will provide the much-needed adult supervision in our state capitol.
But then, I’ve too often been wrong before.