Here Come the Exit Taxes
You can Check out Any Time you Like but you Still Gotta Pay
In case you’re stuck in a blue state dutifully handing half your money to Somali Learing Centers, brace yourself: They’re coming for the other half.
That oceanfront condo in Florida’s starting to look mighty good.
Ten Blue-States Locking the Gates
At least ten states are now exploring an exit or wealth tax to squeeze the last drop from fleeing residents.
That includes California and New York -- of course. Michigan, Colorado, and Washington state — until recently a zero income tax state. Massachusetts and Connecticut are trying to pass one, and Minnesota, who pioneered the modern Learing Center.
In dollars, California’s wealth tax is the crown jewel. It would impose a one-time (allegedly) 5% tax on the entire net worth of the roughly 200 billionaires who live in California, where the top 1% already pays half of state income tax.
A companion bill would add a 1.5% annual wealth tax.
More Tax, Less Revenue
Like all wealth taxes, California’s hits unrealized gains. Meaning company owners will have to sell 5% of the company given almost all the wealth of California billionaires is in the company they founded.
Selling 5% means the stock price crashes and they potentially lose control.
Then they’ll have to keep liquidating a percent and a half every year until they either lose the company or... move to Miami.
As billionaires flee, this takes out the the roughly $3 billion in California taxes those 200 people currently pay -- as in the wealth tax would reduce revenue.
Worse, some will take their companies with them, which employ between one and two million Californians -- pretty much the entire upper middle class outside city workers paid half a million to ensure fire hydrants have no water.
So it could sum to $10 billion of lost revenue. Soaking the rich don’t come cheap.
In fact, one study by five Stanford economists found a wealth tax modeled to raise $100 billion could actually reduce revenue by $25 billion — on top of the exodus of jobs.
Eat the Rich. Then Eat Everybody Else.
The problem is new revenue spawns new parasites, who need feeding. So when the billionaires leave they’ll turn to millionaires. Which is pretty much any Californian who owns a house.
At which point it’s the Detroit doom-loop: Eat the rich til you run out of rich, move on to the kinda rich, the not really rich. When the smoke clears you got welfare and people who don’t have any other option. Well, and the city workers with the fire hydrants.
Happily for California’s Learing Centers and fake hospices, California Democrats are trying to push retroactive exit taxes that would continue taxing you after you leave.
You can check out any time you like but you still gotta pay.
This has already kicked off an exodus, with an estimated $700 billion of assets fleeing the state -- roughly the GDP of Switzerland.
And it’s a warning shot to any livestock still hanging out at the slaughterhouse.
What’s Next
The California blend of wealth tax and exit tax is spreading across blue states, stuck between a massive fraud and welfare class and taxpayers who know how to move to another state.
New York’s pushing a 9% exit tax. Along with a 4% annual wealth tax -- so far only hitting second homes -- Mamdani’s so-called pied-a-terre tax.
These will spread as income taxes rise; Washington and Michigan just hiked their top rate to nearly 10%.
New York City’s already 11%, with plans for 17%.
If you’re in the crosshairs and mobile, it’s probably time to talk to an accountant about changing residency, selling before the taxes — with enough lead time to escape the exit tax. And structuring your business and trusts so you’ve got something left after the Learing Centers are done with you.
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Another example of Democrat accounting and economics.
Peter - another good article, but you miss the flip side benefits. Being a long term resident of northern California, and I mean looong term when tuition at UC Berkeley was free, Reagan was not yet governor, and we wrestled Grizzly bears for fun, I enjoyed this place because it was beautiful and not crowded. I eventually worked half my career in tech, but tech wealth wrecked this place - traffic, angry attitudes, McMansions where once stood cottages and gardens - all went bad. Bow it's coming back - tech is evaporating, wealth is moving out of state - hurrah! Back to easy parking, enjoying this life, no more rich people with vast dreams of a future paradise that has nothing to do with human life and enjoyment.