California lawmakers introduce bill to tax 'extreme wealth,' proposing new 1.5% tax on state's billionaires

A group of Democratic lawmakers in California proposed a new tax that they say could extract billions of dollars from the state's wealthiest people.

All households with net worths of more than $50 million would be subject to a 1% annual wealth tax under a bill introduced by Assemblymember Alex Lee of San Jose.

The rate is higher for households worth more than $1 billion.

The tax targets accumulated wealth rather than income.

According to an analysis by professors at UC Berkeley and UC Davis, the tax would raise more than $22 billion a year.

The current dynamics in the California legislature make the bill unlikely to pass.

Lee tried to introduce similar legislation last year, but it didn't make it to a committee hearing. Similar legislation has also failed.

The bill would need to be approved by voters in order to get round the tax-rate limit.

California has the most billionaires in the US. Critics of the bill fear that it could be used to chase them away.

Last year, Musk moved the headquarters of his company from Palo Alto to Texas, where taxes are lower.

Lee pushed back against that assertion in a statement.

While some say California is driving away higher-income residents, the opposite is true, as we have actually been losing lower and middle-income residents that are being priced out.

With a tax on the ultra-wealthy who pay a lower effective tax rate than the bottom 99%, we can invest in our schools, tackle homelessness, expand needed services, and much more.

The bill would come into effect for billionaires in 2023 and for those with net worths of more than $50 million in 2025.