California Legislators Propose a State Estate Tax

[skipro33]

I think this is a good move to use this money to finance affordable housing for the poor . I keep seeing California has so many homeless . This could really help a lot of homeless even to tax at a little higher rate seems fair till they get affordable housing for the people moving to California .

California has so many homeless because of the mild weather and government entitlements. It's not Minnesota winters! Pretty much short sleeve and shorts year round. They complain here if it rains and pretty much zero snow where the homeless live. I'd rather be homeless in California than just about any place else based on weather alone.

 

[sengsational]

Taxes are commonly levied when valuables, such as money, change hands, even if those particular valuables were taxed previously. It's the change in ownership that triggers much taxation.

True, GH. They tax what they have visibility into. They try find something to tax that will be "fair", but in the end, it's something they can track and measure that gets taxed. Back in the days of kings, one of his subjects just may have shown-up with a "gray hare" as payment, lol!

 

[Breedlove]

This is why I think it sounds like a good idea . If you are going to live in this environment you are going to have to pay . Entitlements and nice things cost money . I would hate to be homeless in Texas , it gets hot here and rains all winter. I think this money could be used to help the working poor find affordable housing . It will only enhance California .

 

[Another Reader]

This is why I think it sounds like a good idea . If you are going to live in this environment you are going to have to pay . Entitlements and nice things cost money . I would hate to be homeless in Texas , it gets hot here and rains all winter. I think this money could be used to help the working poor find affordable housing . It will only enhance California .

How many more ex-Californians can Texas handle? Because you may get more than a few if this passes.

 

[Breedlove]

We are tapped out sincerely our highways are full , we can't build houses fast enough . We have sooooo many people from Illinois here . We have very few entitlements and the weather can be real bad .

 

[Another Reader]

We are tapped out sincerely our highways are full , we can't build houses fast enough . We have sooooo many people from Illinois here . We have very few entitlements and the weather can be real bad .

That's what Californians said 40 years ago...

 

[aja8888]

We are tapped out sincerely our highways are full , we can't build houses fast enough . We have sooooo many people from Illinois here . We have very few entitlements and the weather can be real bad .

Don't forget those from Michigan and Wisconsin! My SIL and her husband who live in Tomahawk, WI visit us every winter. This time they mentioned "moving here".

 

[CaliKid]

I can tell you didn't read the article linked.

The prevailing attitude in California is to take from those that earn things, and give it to those that haven't earned it. If you would have clicked on the link, you could have read about todays latest example of this.

I appreciate your analysis but I was merely saying (without spelling out the exact words) that it's just a proposal. I will be more clear next time. There are proposals every day that don't become law so I don't get too worked up about them. My point was that before people start talking about California as this high tax state, I am going to move out of state, blah, blah, blah... remember that we do not have an estate tax at this time however many other states DO have an estate tax at this time. Plus, the estate taxes in some states, like last I checked Oregon for example, apply to non-residents who own real property there worth more than $1m. Talk about a burden-some law. WOW! Makes California look very low tax and hand's off. I think it is highly unlikely that California will get an estate tax and if we ever do I would be utterly shocked if the amount were below the federal exclusion limits.

 

[CaliKid]

The estate tax is proposed.

My heirs should not have to give up a very large amount of money for the privilege of me residing here. I will continue to own properties here with a total value under the limit, but I will move my principal residence elsewhere if this passes. And so will a lot of other people that have money and brains. It will be a lot more difficult to bring quality high level people into the state if they know their heirs will lose 40 percent of every dollar between $3.5M and $11+MM.

Yes I agree it's a proposal and yes I agree some people will leave the estate if it is passed. However, I suspect the number who would leave would be very low. I do not suspect it will happen so I wouldn't lose too much sleep over it.

 

[gstillson]

At it's most simplistic, estates are what is left over from funds that were already taxed in some form. For example, why should an heir have to pay estate tax on the value of an inherited savings account (as part of a larger estate) when the original owner wouldn't have had to pay such a tax while alive?

Right, but would you not agree that every dollar that went into the lottery pot was also already taxed in some form? I mean aside from people using some questionable sources, most people purchase lottery tickets with dollars that have already had tax paid on them. The entire pool of money has already been taxed. Why then is it ok to tax a lottery winner and not a person inheriting a huge estate?

 

[gerntz]

Funny how this highly political thread is allowed to go on & on. Good grief.

 

[NW-Bound]

Whether the heirs having to sell an inherited home because of the estate tax, or retired people selling to move out of state, perhaps this will provide liquidity in the RE market and alleviate the housing shortage.

I am just wondering out loud about an effect of the tax, whether that is intended or not.

 

[brewer12345]

Gotta pay for all those goodies somehow...

Seriously, it seems like we are in a world where all manner of stuff is getting proposed, much of which has a snowball's chance in Hell of becoming law. Much of this activity seems oriented to stroking one constituency or another rather that actually legislating. No idea if this is one of the nutball rimshots, or something likely to be one law, but I think we would all be better of figuring this out before getting slathered up about any specific proposal.

 

[NW-Bound]

California is a state where some people with the skills in demand can make a lot of money. This is obviously the reason there are rich people there.

So, what do you do with the housing shortage and the wealth inequality that comes from people being able to make money? Shut down these businesses so they will stop making money? We don't want that, do we?

Perhaps a rotation of residents may do some good. You come and have your chance to make good money. Then, perhaps it's time to move out to let someone else have a shot. If you don't go, I will tax you more until you go.

Just some random thoughts.

 

[Another Reader]

Gotta pay for all those goodies somehow...

Seriously, it seems like we are in a world where all manner of stuff is getting proposed, much of which has a snowball's chance in Hell of becoming law. Much of this activity seems oriented to stroking one constituency or another rather that actually legislating. No idea if this is one of the nutball rimshots, or something likely to be one law, but I think we would all be better of figuring this out before getting slathered up about any specific proposal.

It's difficult to tell what will become law these days. In 1978, there was a property tax revolt that culminated in the passage of Prop 13. Today the population and general attitude is very different. The author is from SF, but that does not mean the proposal is doomed.

There have been other threads discussing the flight of wealthy people from high tax states in the northeast to Florida and Texas. My guess is that a lot of the highly paid tech employees and business owners with net worths that exceed the proposed $3.5M limit might be less inclined to come here or stay once they are successful. Combining this tax with the other high taxes and the overall COL, the burden may have the same effect it is having now on the northeast states.

 

[NW-Bound]

... My guess is that a lot of the highly paid tech employees and business owners with net worths that exceed the proposed $3.5M limit might be less inclined to come here or stay once they are successful...

I don't see that as a bad thing, the same way I do not see Amazon going to Manhattan as being good. Why keep adding to the congestion in these places?

There are other places to open a business, and a large well-known corporation will be able to recruit people to come to anywhere short of Timbuktu.

Again, this is easy for me to say, as I do not live in CA. I actually do not care how it works out. It's just another thing interesting to watch.

 

[Teacher Terry]

Brewer, that was not cool.

 

[daylatedollarshort]

The tribe has spoken, the votes all counted and the political party in favor of lowering taxes on the wealthy has been pretty much voted off the island here. The two largest political affiliations are Democrats followed by independents. If most wealthy people here were really worried about higher taxes they would be voting differently.


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[Just_Steve]

Brewer, that was not cool.

Maybe not, but it was funny.

 

[marko]

Here in Mass our estate tax starts at 5% for $1MM and progresses up to 16% on $10MM+ (I think).

However, as I've posted here many times, the wealthy have options.

As an uncle once told me: "Anyone who's worried about estate taxes needs to find a better accountant".

 

[brewer12345]

It's difficult to tell what will become law these days. In 1978, there was a property tax revolt that culminated in the passage of Prop 13. Today the population and general attitude is very different. The author is from SF, but that does not mean the proposal is doomed.

There have been other threads discussing the flight of wealthy people from high tax states in the northeast to Florida and Texas. My guess is that a lot of the highly paid tech employees and business owners with net worths that exceed the proposed $3.5M limit might be less inclined to come here or stay once they are successful. Combining this tax with the other high taxes and the overall COL, the burden may have the same effect it is having now on the northeast states.

Personally, I don't care what happens with this proposal. I would not move to California for a million dollars. I just want the state's population to stay there and stop ruining other states, like mine. I was also pointing out the odd dynamics that seem to have emerged in our political system that seem to encourage these trial balloons.

 

[RetireBy90]

Some of our legislators want to impose an estate tax equal to the recent cut in the federal estate tax. Proceeds will be used to address income inequality, including savings accounts for poor people!

https://www.latimes.com/politics/la...x-legislation-2020-ballot-20190326-story.html

I predict my investments in Arizona real estate will become a lot more valuable, as people with money exit California. It doesn't take much more than a paid for home in the Bay Area or coastal LA and a decent 401 (k) balance to reach the maximum exemption.

We have a rental in Reno where lots of folks are coming from bay area to retire. It had proven to be a great investment as prices have continued to rise and so has the rent received. I expect to keep this for long term as another retirement income check but also expect it to continue to provide asset appreciation due to the trend for boomers to leave high cost areas.

There, I think I managed to keep any political references from my note

 

[Another Reader]

Personally, I don't care what happens with this proposal. I would not move to California for a million dollars. I just want the state's population to stay there and stop ruining other states, like mine. I was also pointing out the odd dynamics that seem to have emerged in our political system that seem to encourage these trial balloons.

50 years ago, that's what Californians said about people from New York and the other northeastern states...

There is not much left in California worth staying for. Everything nice is too expensive, too crowded or too difficult to get to. I know a lot of people in Arizona that own two homes, one in Colorado for the summer and one in Arizona for the winter. I'm waiting for prices to drop to become your new summer neighbor.

ETA: Colorado is not your home state. You fled a mess of a state, as did a lot of your neighbors. You are a early adopter - but others will follow.

 

[brewer12345]

50 years ago, that's what Californians said about people from New York and the other northeastern states...

There is not much left in California worth staying for. Everything nice is too expensive, too crowded or too difficult to get to. I know a lot of people in Arizona that own two homes, one in Colorado for the summer and one in Arizona for the winter. I'm waiting for prices to drop to become your new summer neighbor.

ETA: Colorado is not your home state. You fled a mess of a state, as did a lot of your neighbors. You are a early adopter - but others will follow.

Eh, Colorado is getting ruined for me already. I am seriously considering an escape in the future . Will be investigating Wyoming, the black hills part of Nebraska and south Dakota.

 

[NW-Bound]

... I know a lot of people in Arizona that own two homes, one in Colorado for the summer and one in Arizona for the winter...

My two homes are both in Arizona. The summer home is at 7,000 ft, and only 2.5-hour drive away. Much easier to make weekend trips, even in the winter.