California lawmakers introduce bill to tax 'extreme wealth,' proposing new 1.5% tax on state's billionaires

California lawmakers introduce bill to tax 'extreme wealth,' proposing new 1.5% tax on state's billionaires
A file photo of the California State Capitol in Sacramento. Getty Images
  • California国会议员introduced legislation to impose new taxes on the state's richest people.
  • The longshot bill wouldhit households worth $50 million+, with a higher rate for billionaires.

A group of Democratic lawmakers in California proposed a new taxwhich they say could extract billions of dollars from the state's wealthiest people.

Thebill, introduced by Assemblymember Alex Lee of San Jose, would affect all households with net worths of more than $50 million with a 1% annual wealth tax.

It has a second, higher rate of 1.5% for households worth more than $1 billion.

The tax is especially far-reaching for targeting accumulated wealth rather than income.

The tax would raise more than $22 billion a year in state revenue, according to ananalysisby professors at UC Berkeley and UC Davis.


However, the bill is unlikely to pass given the current dynamics in the California legislature.

Lee tried to introduce nearly identical legislation last year, but it failed to make it to a committee hearing at the time. Other efforts to introduce similar legislation have also failed.

Even if enough lawmakers backed it, the bill would also need special approval from voters in order to get round California's tax-rate limit of 0.4%.

California is home to the most billionaires in the US. Critics of the bill fear it could chase them away.

Elon Musk,ranked by Forbes as the world's richest person, last year moved Tesla's headquarters from Palo Alto to Texas, where taxes are lower.


Lee pushed back against that assertion in a statement on Wednesday cited byFox 5.

He said: "While some say California is driving away higher-income residents, the opposite is true – we've actually been losing lower and middle-income residents that are being priced out while continuing to gain higher-income residents."

"With a tax on the ultra-wealthy who pay a lower effective tax rate than the bottom 99%, we can invest in our schools, tackle homelessness, expand needed services, and much more."

If it passes, the bill would come into effect in 2023 for billionaires and in 2025 for those with net worths of more than $50 million.