San Jose assemblyman proposes state wealth tax ahead of SOTU
WASHINGTON DC - President Biden is expected to once again propose a wealth tax during his State of the Union, even after the idea failed to gain traction when Democrats controlled both houses of Congress.
But even if the so-called wealth tax fails on the federal, lawmakers in several states have introduced similar bills on the local level, including one in California.
"The average effective taxation rate for billionaires is eight percent. That's far below the rate for average middle and working class families across the country. And in California, it's the same way," says Assemblymember Alex Lee (D) San Jose.
Assemblymember Lee says under his bill there would be an one-percent tax on assets over $50-million. Assets in excess of a billion dollars would be taxed at 1.5%.
"99.9% of people in this country are not very, very rich. And they are shouldering the tax burden now. And they want to see those who have an insane amount of money pay what they owe," he said.
But critics say there are philosophical and practical concerns.
"To add on a new tax would actually physically motivate people who earn this much money to just move out of the state," says former San Jose City Councilman and businessman Johnny Khamis.
Assemblymember Lee says the notion that billionaires will be simply sidestep the law and leave the state is overblown.
"Study after study have shown us that it's really middle and lower-class people who move out of states that are high cost because it is high cost. Those who can pay the premium end up staying," Lee said.
It's not clear if President Biden has the political capital to get his wealth-tax proposal through a divided Congress. But Khamis says there's only two ways to balance a budget and he wishes there was less emphasis on taxation.
"There's two sides to the equation -- there's the taxing and the spending. We keep focusing on taxing. And we never look -- neither Republican or Democratic administrations want to do the hard work or looking at our spending," Khamis said.