RE: LeoThread 2026-01-16 18-30

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The proposal is structured to punish rather than extract revenue



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The proposed California wealth tax is far higher than 5%
Intentional and inadvertent drafting choices inflate taxpayers' net worth—potentially many times over. Six such factors include:

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  1. Founders with Class B or other super-voting shares may be taxed on their share of voting interests when those exceed their actual economic stake in the company
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  1. Assessment rules for privately held businesses can lead to massive overvaluations, with valuation floors that ignore economic distress and rules preventing adjustments that reflect actual value
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  1. Severe penalties for understatement of tax, which apply to taxpayers and their appraisers alike, encourage padded valuations and chill challenges to the state's aggressive default assumptions
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  1. Poorly drafted anti-avoidance provisions can overtax transfers, reach assets already in trusts, and tax both an asset and its sale price for sales deemed below fair market value
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  1. Married couples face a marriage penalty plus inclusion of a non-resident spouse's assets, and a divorce settlement could require tax to be paid on assets obligated to an ex-spouse
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  1. Deferral regimes raise costs and introduce risk, since tax may be owed for years on assets that subsequently decline in value