On September 25, 2024, we posted a blog, “A Modest Proposal”, discussing endless political efforts to increase revenues and the contrast between current income taxes and the very modest initial goals of the Federal income tax.
Now comes the Service Employees International Union (SEIU), that has filed a ballot initiative for the November 2026 California general election that would impose a one-time (supposedly) wealth tax of 5% on state residents with more than $1 billion in net worth. The union says the tax would hit 200 billionaires.
Investors should be alert to developments as this proposal moves through the process. Details are scarce, but two key components could be quite problematic. First, valuing illiquid assets is always difficult and can take years to resolve. Second, it appears that some significant asset categories could be exempt. If this proves to be the case, market prices could be affected as investors seek to shift portfolios to exempt assets.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
