Fox Business Network anchor Neil Cavuto questioned California State Assemblyman Rob Bonta on “Cavuto: Coast to Coast” Friday over his proposal to institute a 0.4% wealth tax on Golden State residents worth more than $30 million.
The Alameda Democrat told Cavuto the proposed tax “affects about 0.15% of the California population — not the top 10%, not the top 1%, the top .15%, about 30,000 people” and would generate $7.5 billion in revenue for the state.
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The host asked Bonta what will prevent the ultra-wealthy from continuing to “bolt” from California as taxes continue to rise.
Bonta disagreed with the premise of the question.
“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. So, while worthy of consideration it has not panned out.”
Bonta added that his proposal would apply a “phased-in approach” to make sure Sacramento recoups its share of the income of a California resident who leaves the state.
“If you move in Year One, 90% of the tax bill applies…” he said, adding that the following year it drops to 80% and so on until it is phased out to zero.
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Cavuto questioned whether such a move was legally feasible.
“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, 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,” said Bonta.
Cavuto responded that policy makes taxpayers sound like “prisoners of California” — “[Y]ou’re not letting them leave, if you say you leave I’m still going to zoom you.”
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Bonta said the stipulation recognizes that the wealth of someone leaving the state was in part gained while residing in California. Meanwhile, if someone moves to California and is worth more than $30 million, the tax “phases in” in reverse, beginning at 10 percent in the first year.
“It recognizes that wealth may have been accumulated outside of California,” the lawmaker said.
“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.”