A California state senator has sponsored a bill that would ask Californians to vote on whether the state should implement a tax on the estates of the richest residents.
Sen. Scott Wiener, D-San Francisco, is proposing a 40 percent tax on estates worth more than $3.5 million for individuals or $7 million for couples.
If the bill gets through the Legislature, Californians could vote on it in 2020. If approved, the state constitution would be amended to allow the collection of the tax.
The state could recognize tax revenue of at least $500 million annually if the bill passes. Those funds would be put into a newly created Children’s Wealth and Opportunity Building Fund, which Wiener said would benefit “low-income families by helping them build wealth and end the cycle of inter-generational poverty.”
Wiener said the state needs an estate tax to counter President Donald Trump’s tax bill, which raised federal exemptions on estate taxes to $11.4 million for individuals and double that for a couple.
“Wealth inequality is at a historic high in the United States, and it’s obscene that the federal estate tax exemption has escalated so dramatically,” Wiener said, according to The Sacramento Bee. “As the federal government has slashed the estate tax for wealthy families, working class and low-income families — particularly black and Latino families — have struggled and have little or no wealth to pay for college, purchase a home or otherwise invest in their future.”
Republicans countered it was an unfair tax on small businesses that already have paid their share of taxes. However, Wiener said his bill would return the estate tax to 2009 levels.
There’s no guarantee this bill will make it out of the Legislature, but it is a reminder that Californians need to be proactive in their estate-tax planning. It’s not something that should be done on their own, but rather with the assistance of an experienced attorney.