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Jared Walczak Profile picture
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Jan 19 • 11 tweets • 6 min read
The wealth taxes and high net worth individual taxes rolling out today.🧵#statetax
1. California: a two-tier wealth tax on the worldwide wealth (tangible and intangible, financial and non-financial) of high net worth individuals (1% > $50 million, 1.5% > $1 billion). #caleg #capolitics #wealthtax
2. Connecticut: a surtax of up to 20% on capital gains income for the highest earners, plus a higher CIT and a digital advertising tax. #ctpolitics #ctleg #wealthtax
3. Hawaii: imposing ordinary income tax rate on capital gains income (Hawaii is rare in having a preferential rate, like the fed government), plus estate tax on transfers of property owned by nonresidents. #HInews #HIleg #wealthtax
4. Illinois: mark-to-market treatment of capital gains for billionaires, taxing unrealized gains that may disappear before selling the financial instrument. #twill #wealthtax
5. Maryland: additional 1% tax on high earners' capital gains income. #mdpolitics #mdpol #mdleg #wealthtax
6. New York: mark-to-market treatment of capital gains income, plus an additional tax of up to 15% on capital gains income, atop the existing state (and in NYC, local) ordinary income tax rate. #NYPol #nypolitics #wealthtax
7. Washington: a 1% tax on the value of financial intangible wealth (stocks, bonds, etc.). #waleg #wealthtax
Wealth taxes, like those proposed in California and Washington, yield extraordinarily high effective tax rates on investment returns, and are likely to lead to substantial outmigration of a state's wealthiest taxpayers.

taxfoundation.org/state-wealth-t…
Whereas California's wealth tax is on almost all forms of wealth, Washington uses a narrower base. The good news: it's more measurable. But the thresholds are such that the migration of even a few people could upend revenues. Analysis of a prior year bill: taxfoundation.org/washington-sta…
Illinois and New York are planning mark-to-market treatment of capital gains income (among other changes). Here's what that can mean for states, from a writeup of a similar proposal in New York a few years ago: taxfoundation.org/new-york-budge…

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More from @JaredWalczak

Jared Walczak Profile picture
Aug 24, 2022
Due to an ARPA provision, federal student loan forgiveness wouldn't be a federally taxable event, but it would trigger state income tax liability in some states.
Many states conform to current federal definitions of taxable income. These states would follow the federal government in not taxing the discharge of indebtedness.

Some have up-to-date conformity but exclude ARPA provisions. Absent separate exclusions, these could tax. (cont.)
Others either have outdated conformity to the Internal Revenue Code or highly selective conformity. Some of these have standalone provisions that might preclude taxing the debt forgiveness, or defray it, but most don't.

Student loan debt forgiveness can be a state taxable event.
Read 5 tweets
Jared Walczak Profile picture
Jul 1, 2022
California approved a substantial new tax on lithium mining in the state. Lithium mining has significant environmental costs, and internalizing externalities is a legitimate role of taxation -- but I'm not sure the legislature's logic checks out here. 1/

news.yahoo.com/california-app…
Severance taxes on mining are de rigueur, but if special taxes or tax rates are placed on specific extractive activity, they ought to be associated with differential externalities. Here, we're talking $400-800 per ton of lithium in California, on top of other taxes. 2/
I don't think anyone doubts the environmental impact of lithium mining. It's pretty bad. Higher salinity, soil contamination, and a resulting loss of regional biodiversity. It's way worse than most mining, I think, so a tax doesn't seem initially unreasonable. 3/
Read 9 tweets
Jared Walczak Profile picture
Jan 26, 2022
States and localities can't figure out how to spend the $350 billion in aid they received under ARPA, so Treasury has responded by dramatically expanding eligible expenditures. Now, just about any new spending on affordable housing, child care, schools, etc., is a COVID response.
Under a newly promulgated final rule on Fiscal Recovery Funds, far more expenditures are allowed, the definition of retaining gov't employment levels has been expanded to include increasing government employment, and the definition of revenue loss now covers some revenue gains.
Treasury bent over backwards to grant additional uses of these unnecessary funds, but when it came to addressing comments on the constitutionally-dubious Tax Mandate, Treasury dug in its heels. All the problems of the interim final rule remain in the final rule.
Read 6 tweets
Jared Walczak Profile picture
Jan 25, 2022
When 16 states enacted or implemented income tax cuts last year, they did it out of growth (no spending cuts). More states are looking to do the same this year.

But in Mississippi, the PIT repeal plan under consideration is likely to shrink government.

taxfoundation.org/mississippi-in…
Mississippi's PIT phase-out plan uses revenue triggers that will only allow reductions to proceed if revenues keep growing in *nominal* terms, but they can fall short in real terms because the bill sets an artificially low inflation adjustment, especially for today's inflation.
Cutting taxes is pro-growth, especially in an era of enhanced mobility. But people and businesses are looking for a combination of competitive tax rates and adequate services. Everyone has different definitions of that, but MS presumably has less (if any) room to cut than most.
Read 4 tweets
Jared Walczak Profile picture
Jan 6, 2022
For context, $163 billion in new taxes would *double* California's pre-pandemic tax collections, and it would be adopted despite a 30% surge in collections and an anticipated $31 billion annual surplus. Image
The California LAO's current forecast is $51 billion above the biennial budget's numbers. And there are lawmakers who want another $163 billion a year on top of this? Image
To put a 2.3% gross receipts tax in context, Ohio has a 0.26% GRT that replaced its corporate income tax, its corporate franchise tax, *and* its tangible property tax.

California would impose this in addition to TPP taxes and its 8.84% CIT.

Read 5 tweets
Jared Walczak Profile picture
Apr 2, 2021
I love a good historical example, but I'm not terribly convinced by this @taxjustice piece holding up classical Athens as an exemplar of progressive taxation embraced by the wealthy, and don't know how you'd distinguish it from, say, all of feudalism. 1/

taxjustice.medium.com/tax-avoidance-…
The basic premise here is that the wealthiest Athenians paid a wealth tax to fund military and religious expenses, and that they took pride in these duties, in contrast to today's wealthy. I'm skeptical on a number of points. 2/ Image
I'm not qualified to adjudicate historians' disputes on these taxes, but most think the eisphora, while sometimes progressive, applied to all landowners, rich and poor. All agree it was low, only imposed during war, and was actually a property tax.

hellenicaworld.com/Greece/WS/en/E… 3/
Read 7 tweets

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