California’s Wealth Tax Proposal

Some of the most interesting/aggressive tax law and proposals come from California.

As with so many governments, they're facing a major budget deficit and need to raise more money.

The measure in question is AB 529 (which fizzled out in '23 when it was first proposed) and would create:

• A 1.5% tax on the assets of CA residents with over $1B in worldwide net worth starting potentially in 2024
• And a 1% tax by 2026 for those with a net worth of $50M or more

Governor Newsom has already rejected the $20B proposal and has stated his opposition to wealth taxes. Although this alone makes it unlikely it would ever pass, it has an interesting interplay with the current Supreme Court tax case that was argued in December (Moore v. United States).

Moore v. United States once again is arguing the definition of “income” which has been argued in the courts for the 100+ years since the 16th Amendment was enacted in 1913.

What’s interesting is this case is essentially pushing the Supreme Court to draw hard line in the sand to determine the taxability on unrealized income.

When viewed in that light, it’s very clear that the purpose of this case is to determine if the type of wealth taxes on unrealized income we see floated at the state and national level, would be considered unconstitutional.