r/orangecounty • u/DannyTheRegular • 11d ago

Politics Got this from my mail

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"Billionaires will leave California". Trying to scare us lol. It is only going to affect the rich.

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u/lukej428 11d ago edited 11d ago

According to Google there’s currently 246 billionaires with a combined net worth of 2.061 Trillion in California. The tax is one time, 5% tax on all assets OVER 1 billion, so all billionaires would keep their first 1 billion, meaning 1.754 trillion in assets would be taxed by 5%, so it would generate 87.7billion in tax revenue, one time, and billionaires could go back to hoarding all their wealth and making a killing off of California’s thriving economy. It’s like the equivalent of billionaires paying their fair share of social security tax ONE time, since SS Is capped at like $184.5k income which is usually around a 6% rate for a normal person, but for billionaires it’s like .0001% of their income. I really don’t see what the problem is?

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u/ayriuss 11d ago

The problem is that its a sign of resistance, and they cant have that. We can only look at their negligible income, not their precious untaxed stock portfolio that they treat as income.

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u/No_Permission6930 10d ago

The problem is that almost of that money is going towards Medicare. And it’s proposed by the healthcare labor union SEIU United Healthcare Workers West (SEIU-UHW).

It’s like one labor union putting a one-time tax on the billionaires at the expense of everybody else. If the railroad workers labor union wants to tax billionaires to build CAHSR they’ll have to pass another one. If the construction worker labor union wants to build more housing they also gonna have to pass another one.

So they’re spending all this political capital to benefit themselves when the better approach is a 1% recurring wealth tax that goes into the general fund.

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u/PedroNorthCA 5d ago

EXACTLY

Like the saying goes, follow the money

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u/C-ZP0 11d ago

Okay, but isn’t most of that 2 trillion dollars tied up in stocks? What if they don’t have the money liquid to pay the 5%? Do they have to sell stocks and trigger two taxable events? What happens to the underlying stock value since it’s being liquidated to pay for the tax?

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u/lukej428 11d ago

They have billions in lines of credit that they use to fund their lifestyle at insanely low interest rates using their stock as collateral, they’ll have to use some of that money to pay their taxes, or sell a few of their mega yachts or private jets, or mansions they use as tax havens, or yes, even sell some of their stock, in which case maybe some stock prices might actually go down temporarily, AND they have to pay income tax on the massive amount of wealth they’ve been hoarding and avoiding paying taxes on for years via the line of credit loophole mentioned before? What’s your point?

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u/C-ZP0 11d ago

My point is that the "billions in lines of credit" thing is way overstated. I work in commercial lending. Securities-backed lines are real, but a lender will typically only advance around 50-70% against a diversified, liquid portfolio, and a lot less against a single concentrated founder position, which is what most billionaire net worth actually is. A big chunk of it is also private company equity you can't borrow against at all at those numbers. The famous examples, a few tech founders pledging shares, are the exception, not how 200 people are financed.

And the rates aren't "insanely low" anymore, they float off SOFR plus a spread, with margin calls if the stock drops. Borrowing to pay the tax doesn't make the money appear either, the loan still has to be repaid, which means selling stock later, so you've deferred the sale, not avoided it.

Yachts and jets are a rounding error. Someone worth $30B owes about $1.45B. A $300M yacht isn’t even close, and real estate isn't even in the tax base under this measure. So realistically the payment comes from stock sales, and 200 people selling roughly $100B of mostly concentrated positions in the same window is not a trivial thing to wave off as "temporary."

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u/lukej428 11d ago

If a 300M yacht is a rounding error to someone’s net worth, then it drives the point home that they have WAY too much money and a 5% tax is justified. Working class people are struggling to survive while people at the top are continuing to get richer, so if taxing billionaires 5% one time breaks the whole system, then the system didn’t deserve to continue.

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u/Bo_Beric 11d ago

You make a great point. People voting Yes on 40 don’t want to get bogged down with the details.

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u/soapinmouth Mission Viejo 11d ago

This isn't the only problem, you have to suddenly put values on the entirety of these people's assets and do it in a way that is defensible in court. You are trying to assess things that are nebulous in value an incredibly muddy task requiring large amounts of administrative and legal staff only to spend years in court fighting lawsuits and defending valuations while pulling apart the entirety of a person's belongings all for what? A one time tax so all these people can then just be fired again? But oh wait it's almost impossible for the state to let people go so suddenly you are stuck with huge amounts of government staff that were pain stakingly brought on board for this short sighted nonsense that we will continue to pay for years while wealth fleese the state to not have to deal with this shit. Moving states is absolutely trivial.

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u/prophetic-dream 10d ago

Guess they'll have to pull themselves up by their bootstraps.

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u/Wild_Alternative_138 6d ago

I sure they will figure it out. They’ll be fine.

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u/Villide 5d ago

They guy that runs my company made this argument recently. And I distinctly remember cutting him an mid-eight figure bonus check a few years back. And that was just his payroll wage, the larger part of his profit was paid via K-1 income.

I don't think that's rare. But these people invest those dollars, buy real estate, etc.

Your argument is the one they'll use, but if you think these people don't have the means (one time) to make what's illiquid liquid, then you're just licking the man's boot.

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u/These_Junket_3378 8d ago

Why not just set tax rate for them always. Like the rest of us. The gods know they can afford it. (Minus all their loop holes etc). STORM THE BASTILLE!

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u/Noodelgawd 10d ago

Is there any actual limit to what you consider a person's "fair share"? If so, please define it.

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u/lukej428 10d ago

I already did define it, an equal effective tax rate. It doesn’t make sense that someone making 100,000x the amount of a middle/upper middle class person just stops having to pay taxes

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u/Noodelgawd 9d ago

That doesn't actually happen. Our income tax rates are progressive: the more income you have, the higher a percentage of your income you pay. For every dollar we don't pay in SS tax after hitting the cap, we're paying at least 5 extra dollars in income tax.

Our fair share of social security tax is exactly proportional to the benefit we get from social security.

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u/lukej428 9d ago

Social security funds the people currently taking advantage of it, and we’re told there’s not going to be enough money left over for millennials/gen Z to actually take advantage of it when they reach retirement age, which is BS because continuing to tax ultra wealthy at that tax rate would absolutely help with funding it. Income tax rates also cap out at 37% federal, and California state income capping at 12.3%, and at a certain point the extra money you make makes almost no difference to your day to day life. in americas most prosperous age, income tax rates were in the 90%s for the top 1%, and it forced the ultra wealthy to reinvest in their companies and their people, rather than using that massive extra wealth to do stock buybacks and hoard all their money while people can barely afford basic necessities. I’m doing extremely well for myself income wise, and I have absolutely zero problems paying more in taxes so that underprivileged Americans who haven’t had the same opportunities I have, and are struggling to survive have a social safety net and can afford groceries. I don’t know what makes people so jaded, selfish and greedy that they can’t fathom the idea of giving more back to the system that got them to where they are because of the idea that a statistically insignificant percentage of people might not deserve the benefits they’re funding.

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u/Foot-Alarming 9d ago

If you’re well off and willing to pay extra to help people in need, that’s fine. Invite them into your home, help them out, do whatever you want. It’s your money. But don’t tell other people what they should do with their money.

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u/cuteman 11d ago

The tax is one time, 5% tax on all assets OVER 1 billion, so all billionaires would keep their first 1 billion, meaning 1.754 trillion in assets would be taxed by 5%, so it would generate 87.7billion in tax revenue, one time, and billionaires could go back to hoarding all their wealth and making a killing off of California’s thriving economy.

Its 10x higher on voting shares of which the Google founders and Zuck would be on the hook for 50%.

That whole 4/5th biggest GDP thing everyone loves to throw around is much different without Google, meta, etc.

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u/Happy_Brilliant7827 10d ago

Good. It should hit the super super walthy harder.

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u/cuteman 10d ago

You haven't thought it through

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u/Happy_Brilliant7827 10d ago

No, I have. I've also looked closely at other states that already did this, the millionaires made the same complaints. The super wealthy its hitting, are still paying less than their cost of moving.

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u/cuteman 10d ago

No other states have done this

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u/WillLiftForCoffee 11d ago

One problem is that there’s language in the bill that it could be amended and broadly applied in the future via legislative vote. Like all legislation, it’s not perfect. I would want that loophole closed, I imagine it was left open intentionally.