American Consequences - September 2020

Folks smart enough to amass $30 million in assets are likely smart enough to identify loopholes that his enforcers are not. This list isn’t even the final word, however, as the bill makes clear: “Assets that must be reported separately shall include, but shall not be limited to ” (emphasis added). Say what you will about Bonta, but at least he understands that folks smart enough to amass $30 million in assets are likely smart enough to identify loopholes that his enforcers are not. Speaking of enforcers, Bonta’s legislation would empower the aggressive Franchise Tax Board (California’s IRS) to “adopt regulations to carry out these provisions, including regulations regarding the valuation of certain assets that are not publicly traded ” (emphasis added). The political party that trips over itself to condemn any restriction on abortion as an abridgement of privacy rights sure is comfortable mandating an intimate relationship between you and the IRS... The erasure of economic liberty aside, directing government pencil pushers to • Debts other than mortgages or other liabilities secured by real property • Real property • Mortgages and other liabilities secured by real property

speed rail project in California that would make for a great investment! There’s a reason why the wealth tax has had very little success in other countries... It’s a logistical nightmare. Bonta may be surprised to learn that “worldwide net worth” isn’t like determining how much money you have in your savings account... It’s a little more complicated than that. Or it could be that Bonta is aware of the nuances involved, and the sprawling bureaucracy that would be needed to enact his agenda is exactly the type of adrenaline rush that gets a power-hungry political junkie like himself out of bed in the morning. LOOPHOLES BEWARE Regardless, here’s how Bonta envisions California defining wealth for the purpose of taxing it: • Stock in any publicly and privately traded C-corporation • Stock in any S-corporation • Interests in any partnership • Interests in any private equity or hedge fund • Interests in any other noncorporate businesses • Bonds and interest-bearing savings accounts • Cash and deposits • Farm assets • Interest in mutual funds or index funds • Put and call options • Futures contracts • Art and collectibles • Financial assets held offshore • Pension funds • Other assets, excluding real property

American Consequences


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