California wealth tax proposal hemorrhages $1T as billionaires flee

[rangerrebew]

California wealth tax proposal hemorrhages $1T as billionaires flee
Story by Amanda Macias • 23h

Venture capitalist Chamath Palihapitiya says California’s proposed billionaire tax is accelerating an exodus of ultra-wealthy residents, a shift he argues will worsen and not solve the state’s budget deficit.

Palihapitiya, who has been tracking capital flight from the Golden State, said California has so far lost an estimated $1 trillion.
 

"We had $2T of billionaire wealth just a few weeks ago. Now, 50% of that wealth has left - taking their income tax revenue, sales tax revenue, real estate tax revenue and all their staffs (and their salaries and income taxes) with them," Palihapitiya wrote on X on Sunday.

Even as the measure remains under consideration for the November statewide ballot, some of Silicon Valley’s most prominent figures warn it could trigger an exodus of founders and capital.

https://www.msn.com/en-us/news/other/california-wealth-tax-proposal-hemorrhages-1t-as-billionaires-flee/ar-AA1TZZEk?ocid=hpmsn&cvid=696510bf15f8438e875cc4e4b899527f&ei=124

[rangerrebew]

Fortunately for America, the man most responsible wants to bring his wisdom to all America as president.  How can we be so fortunate?

[PeteS in CA]

It may or may not be legal, but IF the measure qualifies for the ballot and IF it is passed, the tax would be imposed on bogey-billionaires who were CA residents on 1/1/26.

It's still theft, and it would still be one-time $$$$ funding ongoing programs. If it passes, I'm sure that in a year or three a new "one-time" tax will be proposed on 100-millionaires, 10-millionaires, or even 1-millionaires. Somewhere in one of the latter two brackets, ordinary home owners in the SF Bay Area and the Land of LA might wake up and realize, "Wait! That hits me!"

[DefiantMassRINO]

At this point, why risk having your wealth seized by Cali Bolsheviks?  Leave before Kommissar Greaseball closes the Cali border to prevent rich flight.

[Wingnut]

We are full here in FL.  But I hear TX has room.  Y'all will love it in the Austin area.  It's just like Callie. Duggies and homeless camps everywhere, panhandlers, men hating liberal white women and lesbians, and the traffic sucks.  You'll hardly notice a difference except for Cowboys and Cowgirls with guns and the oppressively summer heat.

[Fishrrman]

PeteS wrote:
"the tax would be imposed on bogey-billionaires who were CA residents on 1/1/26."

Doesn't this run afoul of the legal concept of "ex post facto" ...?

[Kamaji]

PeteS wrote:
"the tax would be imposed on bogey-billionaires who were CA residents on 1/1/26."

Doesn't this run afoul of the legal concept of "ex post facto" ...?

No.

[DB]

PeteS wrote:
"the tax would be imposed on bogey-billionaires who were CA residents on 1/1/26."

Doesn't this run afoul of the legal concept of "ex post facto" ...?

You would think so, but they've done it before - and it stood.

[IsailedawayfromFR]

PeteS wrote:
"the tax would be imposed on bogey-billionaires who were CA residents on 1/1/26."

Doesn't this run afoul of the legal concept of "ex post facto" ...?

Makes no difference to a Bolshevik.

The state has been trying for years to seize taxes for any retirement income that resulted from working while in California permanently, not matter where you might retire.

[IsailedawayfromFR]

‘Ungrateful Piece Of Sh*t’: Kara Swisher Berates Californians Fleeing New Wealth Tax

Left-wing podcaster Kara Swisher said on Thursday that billionaires who departed from California to avoid a proposed wealth tax were “ungrateful” and instead should figure out how to come up with the funds to pay it.

Several Democratic gubernatorial candidates, as well as Democratic Gov. Gavin Newsom of California, declared their opposition to a ballot measure backed by the state’s chapter of the Service Employees International Union (SEIU) that would impose a one-time 5% tax on billionaires. Swisher told Democratic Rep. Ro Khanna of California during the episode of her podcast, “On with Kara Swisher,” how she responded to an opponent of the measure.

“It specifically targets about a hundred people, I think it is, who are threatening to leave California, except for Jensen Hong, who’s apparently staying,” Swisher said. “I am of two minds of this. One is you made your, and I said it to one this weekend, I said, you made all your money in California, you ungrateful piece of shit, you could figure out a way to get pay more taxes and… we deserve the taxes from you given you made your wealth here.” https://dailycaller.com/2026/01/19/ungrateful-piece-of-sht-kara-swisher-berates-californians-fleeing-new-wealth-tax/

[Kamaji]

Congress.gov article on Retroactive Taxes and Ex Post Facto Laws

[Hoodat]

You would think so, but they've done it before - and it stood.

Only because it wasn't challenged.  And this was because it provided a benefit, not a penalty.

Remember the Bush tax cuts?  Those were retroactive.  A clear violation of 'ex post facto'.  But no one was going to challenge it.  Same with Trump's tax cuts.

[Kamaji]

Makes no difference to a Bolshevik.

The state has been trying for years to seize taxes for any retirement income that resulted from working while in California permanently, not matter where you might retire.

Taxation of income derived from in-state sources at a point in time when the income-earner is no longer a resident of the state from which the income was derived is a rather complex issue.  In the context of retirement income, I believe there is a federal statute that generally prohibits a state from taxing "retirement income" of a person who is not a resident or domiciliary of the state.  4 U.S.C. § 114.

[Kamaji]

Only because it wasn't challenged.  And this was because it provided a benefit, not a penalty.

Remember the Bush tax cuts?  Those were retroactive.  A clear violation of 'ex post facto'.  But no one was going to challenge it.  Same with Trump's tax cuts.

It's not a violation of ex post facto because it's not a criminal statute.

[Hoodat]

No.

It most certainly does.  If someone was a resident of California up until March 2026 but the bill doesn't become law until June, then the State of California has no Constitutional right to retroactively charge the statutory tax on someone who surrendered California residency before the law was enacted.

[Kamaji]

It most certainly does.  If someone was a resident of California up until March 2026 but the bill doesn't become law until June, then the State of California has no Constitutional right to retroactively charge the statutory tax on someone who surrendered California residency before the law was enacted.

No.

An ex post facto law is not the same thing as a retroactive law.  Kentucky Union Company v. Kentucky.

[Hoodat]

It's not a violation of ex post facto because it's not a criminal statute.

California State Constitution

Article I, Section 9

A bill of attainder, ex post facto law, or law impairing the obligation of contracts may not be passed.


This is an 'ex post facto' law because it subjects penalties on past conditions.  It doesn't have to be a criminal statute.

And you can look up the exact same article and section in the US Constitution as well.  'Law' means law.

[Kamaji]

California State Constitution

Article I, Section 9

A bill of attainder, ex post facto law, or law impairing the obligation of contracts may not be passed.


This is an 'ex post facto' law because it subjects penalties on past conditions.  It doesn't have to be a criminal statute.

No, it's not an ex post facto law.  It's a retroactive law, and retroactive laws imposing taxes are generally acceptable unless the law itself constitutes a quasi-criminal law, or is enforced using criminal penalties.

[Hoodat]

No, it's not an ex post facto law.  It's a retroactive law, and retroactive laws imposing taxes are generally acceptable unless the law itself constitutes a quasi-criminal law, or is enforced using criminal penalties.

You could not possibly be more wrong here.

[Kamaji]

You could not possibly be more wrong here.

If you say so, Chief.  Please provide something more than your personal say-so.

[Hoodat]

If you say so, Chief.  Please provide something more than your personal say-so.

OK, let's review some examples, shall we?

Example 1

Consider tax year 2025.  At the age of 60, you decided to take on a new job in a different state.  You accrued $500k of 401(k) money through your old employer, and you decide to take advantage of the 59½ rule by cashing it out and purchasing a house in your new location, hoping that you can get your old house sold and have the money replaced in a new IRA before the 60-day deadline runs out.

The timing works perfectly.  You pay $500k cash for the new house, sell the old one 30 days later for $500k, and then deposit that amount into a new IRA.  As far as tax laws go, you suffer no penalty.  Because of your age, there is no 10% withdrawal penalty.   And since you replaced the money within 60 days, the funds remain in their original pre-tax retirement status (i.e. they aren't considered income).

Now we step into 2026.  At some point during this year, Congress decides to repeal the 59½ rule, going back to Jan 2025.  So even though I've already settled my taxes for 2025, the new law says I now owe the 10% penalty for withdrawal, and I also owe income tax on the withdrawal (approx. 25% of $500k).  So that's an $175k in additional taxes that I now owe for the 2025 tax year due to a law passed in 2026.  And you insist that doesn't violate 'ex post facto'?


Example 2

In my former state, I owned the house that I inhabited.  The state offered a homeowner's exemption on property taxes which I took advantage of every year.  At the midpoint of 2025, I sold that house and moved to my new state.  Now step into 2026.  My former state decides they need more tax money, so they pass a law in mid-2026 that repeals that tax exemption going back to Jan 2025.  So, now I get a tax bill saying that I owe more taxes for 2025 on a house I didn't own when the law was passed.  And you still insist that doesn't violate 'ex post facto'?

Like I said, you could not possibly be more wrong on this.

[Kamaji]

OK, let's review some examples, shall we?

Example 1

Consider tax year 2025.  At the age of 60, you decided to take on a new job in a different state.  You accrued $500k of 401(k) money through your old employer, and you decide to take advantage of the 59½ rule by cashing it out and purchasing a house in your new location, hoping that you can get your old house sold and have the money replaced in a new IRA before the 60-day deadline runs out.

The timing works perfectly.  You pay $500k cash for the new house, sell the old one 30 days later for $500k, and then deposit that amount into a new IRA.  As far as tax laws go, you suffer no penalty.  Because of your age, there is no 10% withdrawal penalty.   And since you replaced the money within 60 days, the funds remain in their original pre-tax retirement status (i.e. they aren't considered income).

Now we step into 2026.  At some point during this year, Congress decides to repeal the 59½ rule, going back to Jan 2025.  So even though I've already settled my taxes for 2025, the new law says I now owe the 10% penalty for withdrawal, and I also owe income tax on the withdrawal (approx. 25% of $500k).  So that's an $175k in additional taxes that I now owe for the 2025 tax year due to a law passed in 2026.  And you insist that doesn't violate 'ex post facto'?


Example 2

In my former state, I owned the house that I inhabited.  The state offered a homeowner's exemption on property taxes which I took advantage of every year.  At the midpoint of 2025, I sold that house and moved to my new state.  Now step into 2026.  My former state decides they need more tax money, so they pass a law in mid-2026 that repeals that tax exemption going back to Jan 2025.  So, now I get a tax bill saying that I owe more taxes for 2025 on a house I didn't own when the law was passed.  And you still insist that doesn't violate 'ex post facto'?

Like I said, you could not possibly be more wrong on this.

No.  Please provide something more than your personal say-so that a retroactive tax is an ex-post facto law.  Hint:  it doesn't mean what you implicitly seem to think it means.

And states are prohibited from taxing a nonresident's 401(k) by virtue of 4 USC 114, so your example is irrelevant.

[Hoodat]

No.

An ex post facto law is not the same thing as a retroactive law.  Kentucky Union Company v. Kentucky.

You might want to read League v. Texas for yourself before posting some link referencing it.  It has NOTHING to do with this case.  The only thing being "remedied" is California's lack of unlimited tax revenue.

And then there's Calder v. Bull, a 1798 case which defines an 'ex post facto' law as:

a law that makes an action done before the passing of the law, and which was innocent when done, criminal; and punishes such action.

California's statute does exactly that.  The "crime" here is 'living in California while having $1 billion in wealth', a crime punishable by usurpation of 5% of one's wealth.  And the 'ex post facto' violation is that it makes it an offense before the passing of the law.

And finally, there's Orr v. Gilman which references  Carpenter v. Pennsylvania.  And if you scroll down to section 284 of that case, you will find that the court does indeed consider such a retroactive tax to be a violation of 'ex post facto'.

In Carpenter v. Pennsylvania, 17 How. 456, the question arose as to the validity, in its federal aspect, of a law of the State of Pennsylvania imposing an inheritance tax on personal
property which had passed into the possession of an executor before the passage of the act, and which was held by him for the purpose of distribution among the legatees, who were collateral relatives to the decedent. The act was held valid by the supreme court of the state, and was brought up to this Court by a writ of error, where it was contended that such an act was in its nature an ex post facto law, which took the property of an individual to the use of the state because of a fact which had occurred prior to the passage of the law, and also that the law, in its retroactive effect, impaired the obligation of a contract, in that it was alleged to absolve the executor from his contract, implied in law, to pay over the legacies to those entitled to them, just to the extent that the law required him to pay to the state. The opinion of the Court, delivered by Mr. Justice Campbell, was in part as follows:

"The validity of the act as affecting successions to open after its enactment is not contested; nor is the authority of the state to levy taxes upon personal property belonging to its citizens, but situated beyond its limits, denied. But the complaint is that the application of the act of 1826 by that of 1850 to a succession already in the course of settlement, and which had been appropriated by the last will of decedent, involved an arbitrary change of the existing laws of inheritance to the extent of this tax, in the sequestration of that amount for the uses of the state; that the rights of the residuary legatees were vested at the death of the testator, and from that time those persons were nonresidents, and the property taxed was also beyond the state, and that the state has employed its power over the executor and the property within its borders to accomplish a measure of wrong and injustice; that the act contains the imposition of a forfeiture or penalty, and is ex post facto."

[Kamaji]

You might want to read League v. Texas for yourself before posting some link referencing it.  It has NOTHING to do with this case.  The only thing being "remedied" is California's lack of unlimited tax revenue.

And then there's Calder v. Bull, a 1798 case which defines an 'ex post facto' law as:

a law that makes an action done before the passing of the law, and which was innocent when done, criminal; and punishes such action.

California's statute does exactly that.  The "crime" here is 'living in California while having $1 billion in wealth', a crime punishable by usurpation of 5% of one's wealth.  And the 'ex post facto' violation is that it makes it an offense before the passing of the law.

And finally, there's Orr v. Gilman which references  Carpenter v. Pennsylvania.  And if you scroll down to section 284 of that case, you will find that the court does indeed consider such a retroactive tax to be a violation of 'ex post facto'.

In Carpenter v. Pennsylvania, 17 How. 456, the question arose as to the validity, in its federal aspect, of a law of the State of Pennsylvania imposing an inheritance tax on personal
property which had passed into the possession of an executor before the passage of the act, and which was held by him for the purpose of distribution among the legatees, who were collateral relatives to the decedent. The act was held valid by the supreme court of the state, and was brought up to this Court by a writ of error, where it was contended that such an act was in its nature an ex post facto law, which took the property of an individual to the use of the state because of a fact which had occurred prior to the passage of the law, and also that the law, in its retroactive effect, impaired the obligation of a contract, in that it was alleged to absolve the executor from his contract, implied in law, to pay over the legacies to those entitled to them, just to the extent that the law required him to pay to the state. The opinion of the Court, delivered by Mr. Justice Campbell, was in part as follows:

"The validity of the act as affecting successions to open after its enactment is not contested; nor is the authority of the state to levy taxes upon personal property belonging to its citizens, but situated beyond its limits, denied. But the complaint is that the application of the act of 1826 by that of 1850 to a succession already in the course of settlement, and which had been appropriated by the last will of decedent, involved an arbitrary change of the existing laws of inheritance to the extent of this tax, in the sequestration of that amount for the uses of the state; that the rights of the residuary legatees were vested at the death of the testator, and from that time those persons were nonresidents, and the property taxed was also beyond the state, and that the state has employed its power over the executor and the property within its borders to accomplish a measure of wrong and injustice; that the act contains the imposition of a forfeiture or penalty, and is ex post facto."

Nope.

First, I didn't cite to League v. Texas.  You need glasses.

Second, the case I did cite to does precisely point to the position I stated.

Third, no, a 5% tax is not a criminal statute.  Just because you desperately want it to be does not make it so.

But then, you really don't care what the law is, you only care to make it conform to what you want it to be - which essentially makes you in this regard just a garden-variety prog.

[Hoodat]

Nope.

First, I didn't cite to League v. Texas.  You need glasses.

Your post, no?  https://www.gopbriefingroom.com/index.php?topic=576223.msg3263959#msg3263959

Paragraph 4 - First case cited.  League v. Texas.  https://tile.loc.gov/storage-services/service/ll/usrep/usrep219/usrep219140/usrep219140.pdf

Perhaps you are the one in need of glasses.   My words verbatim:  "You might want to read League v. Texas for yourself before posting some link referencing it."

Second, the case I did cite to does precisely point to the position I stated.

First off, it is difficult to read from the pdf you copied from another site and pasted here.  You would have been better served examining the case for yourself first.  Because had you done so, you may have discovered that said case has NOTHING to do with the proposed California law.  Nothing.   Zip.  Nada.  Here, read it for yourself:  https://www.law.cornell.edu/supremecourt/text/219/140

In the Kentucky case, an 'ex post facto' claim was made, but the court correctly ruled that this wasn't a matter of a new law being applied since the law had already been on the books for quite some time.

It is nevertheless contended—and this is the first objection of a Federal nature—that the law is ex post facto. It is to be noted in this connection that the law does not undertake to forfeit the lands only because of things done or undone prior to its passage, but because of the failure of the claimant to comply with the provisions of the law; and he is given until the 1st of January, 1907, in which to file a petition for the ascertainment of the taxes assessable and due upon his title, and until March 1, 1907, to pay the back taxes. But an ex post facto law and a retroactive law are entirely different things.

Taxes assessed for prior tax years 1901-1905 were already statutes.  This isn't about some tax law passed in 1907 that assessed taxes for previous years.  Those tax laws were already on the books.  So no, the case you cited most certainly does NOT point to the position you stated. (Which you would have known beforehand if you had actually read it first).

Third, no, a 5% tax is not a criminal statute.

Really?  So, what happens if someone refuses to pay it?  Let's say some billionaire gets hit with a $250 million tax bill which they don't pay?  Then what?

But then, you really don't care what the law is

Yet I'm the one here citing the law.  Go figure.

you only care to make it conform to what you want it to be - which essentially makes you in this regard just a garden-variety prog.

OK, let me get this straight.  You're the one claiming that it is completely Constitutional for our government to pass a head tax dating back to 2015, declaring that every person alive in 2015 owes $100 in taxes.  Yet I'm the prog?  BWAAAHAAAAAHAAAAAA!!!!

[IsailedawayfromFR]

@Hoodat

Tgat's what I call a smack-a-round

[Smokin Joe]

It's not a violation of ex post facto because it's not a criminal statute.

Not unless it imposes criminal penalties for non-compliance.
If it does, those penalties make it a criminal statute.

That mostly depends on the way the act is worded.