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January 10, 2024 at 11:04 AM
State lawmakers in California will convene Wednesday to debate Assembly Bill No. 259, a piece of progressive legislation introduced last year that would impose a worldwide wealth tax on residents with a net worth above $50 million (or $25 million for married taxpayers filing separately).
As summarized by its supporters, the bill imposes an annual 1% tax on a resident’s worldwide net worth in excess of $50 million. The bill would also impose, for taxable years beginning on or after Jan. 1, 2026, an additional tax at a rate of 0.5% of a resident’s worldwide net worth in excess of $1 billion (or in excess of $500 million in the case of a married taxpayer filing separately).
The bill describes “worldwide net worth” with reference to specific federal provisions and would provide that worldwide net worth does not include certain assets including personal property situated out of state, directly held real property or liabilities related to directly held real property.
The bill would also authorize the state’s Franchise Tax Board to adopt regulations to carry out these provisions, including regulations regarding the valuation of certain assets that are not publicly traded. Further, the bill would require new certifications by taxpayers stating that they are meeting their tax liabilities, to be made under penalty of perjury.
Another feature in the bill would establish an entity called the Wealth Tax Advisory Council. If passed as introduced, the legislation would require the council to determine an adequate level of annual funding and staffing for the administration and collection of the wealth tax imposed by this bill.
