In This Season of Giving, States Are Exploring New Extremes of Tax-Taking

In This Season of Giving, States Are Exploring New Extremes of Tax-Taking
(AP Photo/Ted Shaffrey, File)

After their shutdowns led to a slashing of tax revenues politicians are getting desperately creative.

Politicians who have been flexing newfound power during the pandemic are experiencing another challenge. Not to suggest there should be sympathy, but more than just independent citizens and private businesses, state governments have also been feeling the financial crunch. Granted, in many cases these are self-imposed issues, as governments who insist on keeping their citizens bottled up at home and businesses shuttered are starting to realize this also leads to numerous tax revenue streams being cut off.

A case being brought directly to the Supreme Court will likely have some far-reaching effects for state governments. Recently the state of New Hampshire filed a petition with SCOTUS to curtail neighboring Massachusetts from taxing its residents. The issue is that a large amount of the citizens commute to nearby Boston, and other areas inside the Baked Bean state, and in the days now of office closures and remote working those citizens are now working from home. That is, they are working inside New Hampshire.

As a sign of how significant this ruling could end up becoming now less than 14 other states have submitted briefings with this petition or have their Attorney Generals submitting support for the petition. This is a decision that will affect billions in revenues, a sum that takes on heightened significance at a time when states are suffering through record losses in revenues. Considering how many companies have not only adapted to remote workers but are adopting the practice this will become a deeply important case, should SCOTUS elect to take it up.

In another instance of desperation for recovered tax losses it takes on a far less logical quandary and becomes one of sheer desire for the confiscation of wealth. Not surprisingly this idea emanates from California.

Looking far past a simple income tax, the proposed idea is to go after the accumulated wealth of individuals (which has already been taxed, mind you) but with some egregiously encompassing standards. The new proposal will first be increasing the state’s already record high income tax rate on top earners, from the galling 13.3% levels to now become the offensive 16.8%. 

But as well there will be a new wealth tax on those holding assets with a value of $30 million and above. This is regardless of where those assets are located; the tax would include any and all holdings outside the state. Properties owned in other states, as one example, would be calculated towards your net worth and taxed — in California.

Then it becomes truly offensive. More than including part-time citizens and those with a dual residency in another state, this new surcharge on the wealthy would take effect on anyone who spends only 60 days within the state’s borders. Those who visit family a couple of times a year could become at risk. 

Have you seen those commercials touting California as a diverse vacation spot? Well anyone engaged in a lengthy tour will become ensnared by this tax. Any collegians who wanted to spend a surfing tour during summer break could be on the hook. This would even apply to foreign travelers who spend a lengthy stay before kiting back to their countries.

It gets even more obscene from here. Moving away to curtail your responsibility? Too bad, you will still be responsible for paying it. This new tax would follow you even after you flee, as it will apply to anyone going forward ten years. Not only would those taking an extended vacation become obligated for a decade, but any residents who move and then strike it big within those ten years would have to kick back a portion to the state. Consider the scope of this. 

You can go off to live elsewhere and start making your fortune, but you will be responsible for paying back to your former residence. If a football player attends high school in California and after college ends up signing a huge contract with a New York team his agent will have to kick back a portion to his state of origin. 

The genius of this plan has yet to be discovered. Not only are the wizards who work in Sacramento doing what they can to drive people out but they now want to do whatever they can to repel any new arrivals. With tax revenues depleting why not take steps that will impede those seeking out business ventures? When hurting for cash who cannot see the wisdom of impacting the tourist industry by driving away the wealthy travelers who would spend extended time in the state?

The likelihood of this proposal surviving is slim, but we should all be wary of the vibracy found in the creative minds found in California’s creative tax divisions.

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