Election 2020 Discussion Of Voter ID Laws. ( What A Boring Thread Title For A Hot Button Topic.)

[ShadowArxxy]

Yeah about that, how is THAT not against that constitutional right to not have movement between states restricted that was brought up before?

It's probably unconstitutional on its face, but it can't be challenged in the courts unless it actually passes into law -- right now, it's just a proposal.

There is a (very thin) argument that because wealth accumulates over time, California is in fact taxing wealth that was made in California, even though the taxpayer is no longer a California resident. While thin, this is not a completely bullshit argument; the basic principle that "income is taxed where it is made" is a well accepted principle, which is why a resident of State X who works in State Y has to pay State Y income tax on the income even though they don't live there.

This principle has been recently stretched by certain states trying to claim that "A resident of State X who *normally* works in State Y has to pay State Y income tax even when working from home in State X, because they *would have* made that income in State Y were it not for the pandemic." That is a HUGE stretch and likely unconstitutional, but the legal challenge to it has only started working through the system.

It probably does. This is a brand new law with lawsuits trying to get it tossed currently happening.

It's not a brand new law, it's only a legislative proposal which hasn't even been voted on.

 

[Abhishekm]

There is a (very thin) argument that because wealth accumulates over time, California is in fact taxing wealth that was made in California, even though the taxpayer is no longer a California resident.

How does that apply to an income tax exactly? I mean its income not wealth. That stretches the working in State X paying in State Y thing even further.

 

[ShadowArxxy]

How does that apply to an income tax exactly? I mean its income not wealth. That stretches the working in State X paying in State Y thing even further.

The "exit tax" proposed in AB-2088 isn't an income tax or technically a separate tax at all, it comes from the calculation of wealth tax:

(b) Special Apportionment Rules for Wealth Tax.
(1) General Rule. In general, the portion of a taxpayer’s wealth subject to the tax imposed by this part shall be multiplied by a fraction, the numerator of which shall be years of residence in California over the 10 last years, and the denominator of which shall be 10. For the purpose of calculating the numerator described in the previous sentence, any partial year of residence as calculated under paragraphs (2) and (3) of subdivision (a) and shall be included in the numerator.

As you can see, it explicitly only applies to "the portion of wealth subject to the tax", i.e., the portion which was made in California. While it is a stretch, in many ways it's less of one than the "working from home doesn't count" argument, since "income is taxed where it is made" is a broadly accepted principle to start with.

 

[Abhishekm]

The "exit tax" proposed in AB-2088 isn't an income tax or technically a separate tax at all, it comes from the calculation of wealth tax:

Then what was the 'continue to pay state tax for 10 years' talk?

 

[Abhorsen]

As you can see, it explicitly only applies to "the portion of wealth subject to the tax", i.e., the portion which was made in California. While it is a stretch, in many ways it's less of one than the "working from home doesn't count" argument, since "income is taxed where it is made" is a broadly accepted principle to start with.

That's probably going to be tossed. The 'working from home doesn't count' is being challenged as well by New Hampshire v Massachusetts, where Massachusetts tried to levy income tax against people who are working for companies in MA but are working at home in NH. This is going straight to the Supreme Court as it is Original Jurisdiction (state v state).

As for this tax, there's a huge question about whether a state can tax someone out of state who doesn't work in that state or have a business relationship with that state. This would probably violate jurisdiction even worse than MA.

 

[ShadowArxxy]

Then what was the 'continue to pay state tax for 10 years' talk?

It's literally the provision I quoted. The California wealth tax on wealth over $30 million accumulated in California, would continue to be paid after a California resident moved out of California, based on the fraction of the last ten years lived in California. That's the bit of about "multiplied by a fraction".

That's probably going to be tossed. The 'working from home doesn't count' is being challenged as well by New Hampshire v Massachusetts, where Massachusetts tried to levy income tax against people who are working for companies in MA but are working at home in NH. This is going straight to the Supreme Court as it is Original Jurisdiction (state v state).

I don't disagree that it probably will be tossed, or that it *should* be tossed. I'm saying that because the California *proposal* would stretch the principle in a different way and is legitimately targeting wealth *made in California*, it's not a worse stretch of the principle.

 

[Abhorsen]

I don't disagree that it probably will be tossed, or that it *should* be tossed. I'm saying that because the California *proposal* would stretch the principle in a different way and is legitimately targeting wealth *made in California*, it's not a worse stretch of the principle.

No, it's a worse stretch. For the MA stuff, they can at least say that business is somewhat local to MA, and if they actually wanted to do it, they could swap it to a payroll tax targeting the business employing them instead. But California can't do that, as the person can remove the wealth from CA entirely, at which point it isn't in their jurisdiction at all.