Wealth tax confuses root of fiscal woes

California’s wealth tax proposal is now live.

Assembly Constitutional Amendment 8 would permit the Legislature to “impose a tax upon all forms of personal property or wealth, whether tangible or intangible” and would establish a task force to oversee wealth tax administration.

The proposal, introduced by Assembly members Alex Lee, D-San Jose, Wendy Carrillo, DLos Angeles, Lorena Gonzalez, D-San Diego and Miguel Santiago, D-Los Angeles, lays out the case for the wealth tax with familiar talking points.

The legislation indicates the state “has long-term needs that are not being met using existing revenue sources,” and that there are now “new needs,” including “pandemic recovery.”

Of course, if the lawmakers are truly concerned about ensuring the state has the funds available to handle existing needs, a good starting point is ensuring that current uses of public funds are appropriate and well-managed.

State lawmakers serious about ensuring the state has the resources necessary to address deficiencies in education, infrastructure or other matters should be pushing to scrap unjustified frivolities like the wasteful high-speed rail project and look for cost savings with respect to public sector pensions and other post-employment benefits.

But we won’t hold our breath for that to happen.

With respect to “new needs,” pandemic recovery is important, but it’s hard to figure out how proposing massive tax increases at a time when the economy is still in a fragile state is consistent with a genuine interest in pandemic recovery.

The legislation goes on to argue the wealth tax “will restore fairness to California’s tax system.” This suggests that California’s tax system, which is already reliant on the top 1% of earners paying the majority of income taxes, has at some point become unfair.

The only thing obviously unfair about California’s tax system is the extent to which state lawmakers squander the money they already have to work with while perpetually complaining that the real problem is that Californians don’t pay enough in taxes. If lawmakers put the interests of average Californians first, instead of special interests and public sector unions, they’d see things more clearly.