California braces for outbound migration of fat cats…

Loss of SALT deduction may be the straw that breaks the camel’s back.

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Last week, we reported some moving data from United Van Lines that indicated “moving deficits” in high tax & spend states: Illinois, New York, New Jersey, Connecticut, Massachusetts.

See Northeast states continue to experience a “moving deficit”…

We expressed surprise that California was rated as “neutral” not “outbound”.

Well, according to the Sacramento Bee, it’s just a matter of time.

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Even Gov. Jerry Brown has observed: ““People with higher incomes will pay a lot taxes (when SALT taxes deductions are cut), and some of them may be tempted to leave.”

That’s a problem because “The state’s wealthiest 1% pay 48 percent of its income tax, and the departure of just a few families could lead to a noticeable hit to state general fund revenue.”

In the past, California passed tax increases with impunity, assuming that “elites are embedded in the regions (like California) where they achieve success, and they have limited interest in moving to procure tax advantages.”

Now, that’s not a certainty, and the state is considering some very creative (and, somewhat laughable) ways to offset the likely drop in individual tax receipts ….

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Here are a couple of ways that California is moving proactively to offset the effects of a possible millionaire migration:

1) Declare the State of California to be a charity.

According to the Bee, “(California) Senate President pro tem Kevin de León introduced a bill that would allow California residents to write off their state taxes on their federal returns as a charitable deduction. De Leon’s bill cleared a second committee this week and is on its way to a vote on the Senate floor.”

The logic is simple: If California is deemed a charity, then taxes paid to the state can be considered charitable deductions … and, since charitable deductions are uncapped under the new tax law, Californians would have their SALT deductions fully restored.

Tax experts are betting the under on this one.

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2) Force California based companies to share their windfall tax savings with the state.

“A proposed Assembly Constitutional Amendment by Assemblymen Kevin McCarty, D-Sacramento, and Phil Ting, D-San Francisco, would create a tax surcharge on California companies making more than $1 million so that half of their federal tax cut would instead go to programs that benefit low-income and middle-class families.” Source

The logic: the tax cut for corporations is an undeserved windfall that – if shared with the state – could provide added benefits for working-class families … apparently,regardless of citizenship.

So, far no companies have volunteered for the share-the-wealth initiative.

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You just can’t make this stuff up …

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#HomaFiles

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