SACRAMENTO - Assemblymember Rob Bonta (D-Oakland) and more than a dozen fellow lawmakers have introduced legislation that would establish a first-in-the-nation net worth tax. This proposed wealth tax would generate an estimated $7.5 billion per year for California’s vital needs like education, housing, health care, and other state services.
The California Wealth Tax (AB 2088 as amended) would apply a 0.4% tax on the portion of a taxpayer's net worth that exceeds $30 million. (approximately 30,400 people.)
During the COVID-19 pandemic, California has been forced to shut down many parts of its economic engine, creating a $54 billion dollar budget deficit in the last and current budget years. Governor Newsom signed the 2020-21 state budget into law, enacting a $134 billion General Fund spending plan that attempts to manage the significant budget shortfall through a combination of reserves, available federal funds, temporary revenues, internal borrowing, and deferred payments. The budget also includes $14 billion in spending cuts and delayed payments that would be rolled back if the state receives substantial federal fiscal relief. Notably, the budget does not include any substantial new revenue. Historically, recessions are shorter in duration when new revenues are part of the recovery.
“The California Wealth Tax would add critically needed revenue for California by creating a more equitable tax structure,” said Bonta. “Families are hurting right now. COVID-19 has only made matters worse. In times of crisis, all Californians must step up and contribute their fair share. Asking these well-resourced Californians to give a little more to keep our people working and support our most vulnerable is the right thing to do.”
Joints authors of the California Wealth Tax (AB 2088) are Assemblymembers Rob Bonta, Wendy Carrillo, David Chiu, Lorena Gonzalez, Ash Kalra, Miguel Santiago, Mark Stone, Phil Ting and Buffy Wicks. Senator Nancy Skinner and Assemblymember Kansen Chu are principle coauthors. Assemblymember Reggie Jones-Sawyer, Senator Maria Elena Durazo and Senator Lena Gonzalez are coauthors.
"As millions struggle to feed their families and keep a roof over their head during this pandemic, the rich are just getting richer," said Assemblymember David Chiu (D-San Francisco). "It is long past time that California had an equitable tax structure that allows us to provide for all Californians."
“The extreme wealth gap that plagues our state pre-dates the COVID-19 pandemic,” Assemblymember Lorena Gonzalez (D-San Diego) said. “Now, middle-income and working class folks are faced with being unemployed or they’re forced to return to jobs that put them at a higher-risk of getting sick. Our economy has left working people behind for too long. I’m proud to joint author this proposal to tax extreme wealth in our state to help families that are struggling to stay afloat in this economic downturn.”
"We have people better off than they were before the pandemic, and others who are on the brink of losing it all,” said joint author Assemblymember Miguel Santiago (D-Los Angeles). “We cannot just sit back and turn a blind eye. We are at a very critical point in time where if we don't start putting dollars where our values are, we will see unprecedented devastation in our communities. We need people to start pulling their own weight here, and it starts with the ultra-rich.”
“The most critical thing we can do to ensure that we’re strengthening our social safety net is to create a more equitable tax structure,” said Assemblymember Buffy Wicks (D-Oakland). “This is especially true amid the devastation brought on by the pandemic. From housing and homelessness, to public education and food security, this bill will help essential services recover from this economic crisis in the most just, inclusive way possible.”
AB 2088 is co-sponsored by the California Federation of Teachers, SEIU California, and the California Teachers Association.
Assemblymember Rob Bonta represents the 18th Assembly District, which includes the cities of Oakland, Alameda, and San Leandro and is the Assistant Majority Leader.