RE: LeoThread 2026-01-16 18-30

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:

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

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

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

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

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

1. Deferral regimes raise costs and introduce risk, since tax may be owed for years on assets that subsequently decline in value