California Gov. Gavin Newsom has appointed Assemblyman Rob Bonta as state attorney general, subject to legislative confirmation. Billed as the first Filipino American to hold the post, Bonta would also be the first attorney general who believes that California can keep taxing people for 10 years after they leave the state.
The Oakland Democrat was the prime mover of AB 2088, the California Wealth Tax, which, had it passed, would have slapped a 0.4 percent tax on the portion of a taxpayers net worth that exceeded $30 million. As Bonta explained, Asking these well-resourced Californians to give a little more to keep our people working and support our most vulnerable is the right thing to do.
As embattled Californians understand, a tax is not a request but a demand, a taking. Bonta wanted the new tax to keep on taking even after Californians leave the state. AB 2088 would have taxed former Californians 90 percent of their in-state levy in the first year after they left the state and 80 percent in the second year, phasing out over a decade.
Theyre no longer California residents, you cant legally do that, Fox Business anchor Neil Cavuto challenged Bonta in 2018. The Yale law alum responded: For 10 years, the wealth was accumulated during their time in California [so]we believe we can do that.
Paul Bleeg of the EisnerAmper accounting firm didnt think so. Attempting to tax a former resident for 10 years after they terminate their residence is the same as taxing them for life, Bleeg told Bizjournals. Its completely unhinged to think this is okay.
Bontas ten-year tax plan for former residents recalls Californias 26-year campaign against Gilbert Hyatt, inventor of the first single-chip microprocessor in 1990. The invention earned Hyatt a lot of money, so he decamped from California, which taxes incomes, to Nevada, which does not. Californias pillage people, otherwise known as the Franchise Tax Board (FTB), claimed the inventor lied about his residency and socked him with a bill of $13.3 million in back taxes and penalties.
By August 2017, the FTB claimed interest had boosted Hyatts tax tab to a whopping $55 million. The case landed with Californias Board of Equalization, which ruled that Gilbert Hyatt was, in fact, a Nevada resident when California tax collectors charged him with lying about his residency. The final settlement in 2019 brought no new tax revenue to California, which wasted more than $25 million in pursuit of Hyatt.
The latest attempt at a wealth tax would doubtless have driven other creative, productive people out of the state.
In the internet age entrepreneurial people can become very wealthy by inventing useful products that people want to buy. For Bonta, however, wealth is simply accumulated, and the AG appointee seems to assume that all wealth confiscated by the state directly benefits the people, with little if any waste or fraud. True to form, the tax measure was cosponsored by the California Federation of Teachers, SEIU California (government employees), and the California Teachers Association.Bonta seems unaware that California already imposes some of the highest income, sales, and corporate taxes in the nation. The highly volatile system, as veteran California commentator Dan Walters notes, at best makes little sense in the 21st century and at worst could trigger a future fiscal meltdown.
AB 2088 fizzled last summer, but it stands as a demonstration of government greed, which in California is truly fathomless. If Californians thought the states ruling class was unhinged, it would be hard to blame them.
The Assembly and Senate have up to 90 days to confirm Rob Bonta as state attorney general. The post is up for a vote of the people in 2022.