Raising taxes on the super wealthy is a hurdle that even the nation’s most left-leaning states have yet to overcome.
But that hasn’t discouraged a coalition of Democratic California lawmakers from trying again.
Assemblymember Alex Lee, a San Jose Democrat, has reintroduced a bill that would tax California’s billionaires at a rate of 1.5% starting in 2024. In 2026, those worth over $50 million would face a 1% tax.
“For far too long we’ve allowed income inequality to deepen and fester in this state and in this country, where the rich get wealthier and the middle class shrinks and falls further behind,” Lee said during a press conference Monday afternoon.
Lee cited a 2021 ProPublica investigation that concluded America’s ultra rich “effectively sidestep” the federal income tax system by amassing wealth in stocks and property, which aren’t taxed unless and until they’re sold. Many of the nation’s richest people pay a smaller effective tax rate than the average American.
AB 259, which Lee reintroduced last week, would not work like the usual income tax. It would target a person’s “worldwide net worth,” which includes “realized and “unrealized” assets like stocks, real estate, art and collectibles, farm land and offshore accounts.
If signed into law, the tax would generate about $21.6 billion in revenue and affect the top 0.1% of California households.
Enforcement would cost about $1.275 billion over the first four years, according to the bill. It creates “Wealth Tax Administration Funds” within the Franchise Tax Board and the Justice Department, which would be funded on an annual basis.
Supporters of Lee’s bill include several other Democratic lawmakers, along with labor groups like the California Federation of Teachers and the American Federation of State, County and Municipal Employees.
“This is not just about income inequality — it’s about addressing the billionaires who can afford to send themselves to space, but refuse to pay for our infrastructure, for our higher ed, for our education, for our children, for our hospitals,” said Assemblymember Liz Ortega, D-Hayward, one of the bill’s coauthors.