With millionaires in sight, California government studies “roaming” tax proposal

I’m 2020, o podcaster Joe Rogan announced that he would leave the city of Los Angeles, California, for Texas. The decision to change venues came about two months after Rogan signed a $100 million contract with the Spotify, around May of last year.

The communicator justified the change of address in one of the episodes of his show: “I want to go to a place in the center of the country, where it is easier to visit both coasts and where it is possible to have a little more freedom”. And concluded: “Los Angeles is very overcrowded.”

The arguments may sound plausible, but the real motivation for Rogan’s transfer may be something else: taxes. In California, individuals must pay 13.3% income tax, the highest in the country. Thus, the new “Texan” would have to shell out more than 13 million dollars (68 million reais) on account of his new deal with the distribution platform if he stayed in Los Angeles.

In Texas, he would be free of charge. In the state run by Republican Greg Abbott, residents don’t have to pay state income taxes, just federal ones, the maximum amount of which is 37% for individuals.

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Other millionaires, including Elon Musk, founder of Tesla and second-richest man in the world, have followed in Rogan’s footsteps, leaving sunny California and its high tax burden behind.

In 2011, Occupy Wall Street was part of a global wave of protests that opposed, among other things, social injustice and income inequality in the country, definitively putting the issues on the agenda / Disclosure

Counterattack on the runaways

Although it cannot prohibit the trip, the California government is considering at least applying a “toll”.

A bill that provides for a tax that accompanies the well-heeled has been discussed for the state. The idea is to charge 0.4% per year from those who built, in the state, all or part of a fortune in excess of 30 million dollars (157 million reais).

“I think that would mitigate, yes, the problem of address changes, and I think that’s fair enough,” he told the Brazil in fact businessman and activist Morris Pearl.

He was previously a director of BlackRock, one of the largest asset managers in the world, and now serves as an advisor at Patriotc Millionaires (Millionaire Patriotas), an organization made up of – check this out – millionaires who advocate fairer taxation with a view to better income distribution.

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According to Pearl, New York is also discussing a similar proposal, which is not very different from what is already happening at the federal level.

“If a millionaire tries to leave the country and give up his US citizenship, he will suffer a huge fiscal impact. So I think it’s fair to think about similar measures at the state level. and think that it will no longer contribute to society,” he says.

Even aware of the news that Rogan, Musk, and other powerful people have changed addresses for tax reasons, Pearl believes that this is not a good justification for barring tax increases or for discussing the “Exit Tax” (Exit Tax). how this itinerant charge became known.

Pearl says there are more millionaires moving to cities like Los Angeles and New York than fleeing them, and in the end, almost no one chooses their city of residence with taxes in mind, “because, in most cases, taxation it doesn’t change the life of someone with that much money.”

Congresswoman Alexandria Ocasio-Cortez, at an event at the Metropolitan Museum, marked the message “Tax the rich” on her dress / Dimitrios Kambouris/Getty Images for The Met Museum/Vogue /AFP

But if taxes do not interfere with lifestyle of these individuals, they impact the collective too much. For example, according to a study of the Americans for Tax Fairness (Americans for Fair Taxation) made in 2009, nearly 1,500 families claimed to have received more than $1 million in that year’s fiscal year, but did not pay even 1 cent in taxes on that amount.

This helps to understand why today 1% of Americans control 35% of the national wealth, while 80% of the population at the bottom of the social pyramid has only 11% of the wealth.

One of the most effective remedies for combating this epidemic inequality is changing the taxation of large fortunes – and this is not a recent finding. In the 1950s and 60s, when the United States enjoyed full growth, its citizens contributed up to 91% of their income, a figure that today is no more than 40%.

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“Part of this problem is that people like me, who earn income through dividends and shares, don’t have to pay taxes like a salaried person. that, even though we earn the same things, my purchasing power is greater, simply because I don’t have to pay the same tax,” explains Morris.

In the end, the businessman and activist confesses that he accepts only one argument in this tax discussion: “‘if you tax me more, I’ll have less money.’ money, but that’s okay. I think it’s right that this is the case, especially since this measure would only affect some 2,000 people, which is not even 1% of the country’s population.”

Edition: Arturo Hartmann


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