The Stealth Tax in Proposition 40

By David R Henderson. Excerpts:

"California’s Proposition 40 would impose a one-time tax of 5% on people with a net worth of $1 billion or more."

":The initiative’s Section 50310 states: “The Legislature may amend the 2026 Billionaire Tax Act, by statute passed in each house of the Legislature . . . [with] two-thirds of the membership concurring, if the statute is consistent with and furthers the purposes of the 2026 Billionaire Tax Act.”"

"California’s heavily Democratic Legislature could use the law to increase taxes on people who aren’t close to being multimillionaires—let alone billionaires."

"Most personal property is taxable at the same rate as real property (1%), while taxes on stocks and bonds are capped at 0.4%. The authors of Proposition 40 apparently understood this and wrote Section 50310 to supersede Article XIII [of California’s Constitution]." 

"After the 16th Amendment authorized the federal income tax, it started small. In 1913 the tax rate on married couples filing jointly was 1% on income up to $20,000 (equivalent to some $674,000 today). The top rate was 7%, on income above $500,000 ($16.8 million today). Five years later, in the midst of World War I, the rate was 6% on income up to $4,000 and 77% on incomes over $1 million."