So Wrong, I Almost Wish It Would Pass

Sometimes a proposed law is so wrong and so destructive, but so typical of a certain philosophical bent, that I almost wish it would pass, if for no reason than to have an Atlas Shrugged-type object example of disastrous results.  Such is the case for a California ballot initiative that has qualified for the signature-gathering stage.  The initiative, in part:  (full text linked here)

  • Imposes one-time tax of at least 55% on property
    exceeding $20 million of a California resident or held in California by
    nonresident.  [note that this is an asset tax, not an income tax]
  • Imposes one-time tax (between 36.5% - 54.3%) on income exceeding $10 million when resident dies or leaves California.
  • Imposes
    additional 17.5% tax on total incomes of taxpayers with income
    exceeding $150,000 if single, $250,000 if married; 35% if incomes
    exceed $350,000 if single, $500,000 if married.
  • The proceeds of this money will be used to:
    • To
      purchase 30% to 51% of the outstanding shares of stock in ExxonMobil,
      Chevron, General Motors, Ford, Goldman Sachs, JP Morgan Chase, and
      Citigroup, in order to ensure California has an uninterrupted source of
      energy and financial capital.
    • To drain and restore the Hetch Hetchy Valley to it's condition at the beginning of the 20th century.
    • Use
      any Surplus funds to combat Global Warming, make infrastructure repairs
      and improvements, and to research alternative energy sources.

Beyond the unbelievably Marxist confiscation going on here, it begs the question of just what supply of energy and financial capital that California is not getting today that this will somehow ensure.  The implication seems to be that ExxonMobil, GM, and Citigroup are too fair-minded, selling their wares too even-handedly, and that California would prefer their attention tilted towards California.

Of course this initiative is profoundly immoral, so I can't do anything but deride it, but it would make for a spectacular object lesson (though one would have thought the Soviet Union's experience to be sufficient to this task, but apparently not).  I am sure GM's troubles would be greatly helped by replacing its board of directors with the California State Legislature  (the only American organization running a bigger deficit than GM) and replacing Citigroup's credit analysists with California social services beauracrats.  I would kind of like to see this in the same way I would love to see what happens if I threw a crate of flourescent tubes off a 10th-floor roof  -- I would never actualy do it, because it would be unsafe and destructive, but I can still dream about how compelling the disaster would be.

Postscript: One could probably label this the Arizona and Nevada economic stimulation act and probably not be far off the mark.

  • Charlie B

    Don't you mean the surveyors and lawyers full employment act? Isn't breaking a $20 million property into a smaller parts each worth much less than $20 million the inevitable loophole?

  • http://profile.typekey.com/aynrandgirl/ aynrandgirl

    If they get hold of the major brokerage houses, I shudder to think what that will do the major stock markets. That would be good for me, since it makes private businesses like mine much more desirable commodities for investment.

  • clouse

    What a nightmare. I wonder how many people would actually have enough cash on hand to pay this tax and how many would have to start liquidating. And will the Communist State of California take over the businesses of owners who can’t make their tax payment because of falling asset prices?

  • skh.pcola

    If they provide enough lead-time before the date that the law is enacted, the state might have to set up contraflow out of the largest California cities to handle the mass exodus of anybody with a brain and $. That would be disastrous to surrounding states, as the influx of wealthy socialists would tip the balance of power and begin the sordid slide towards a Cali-type of dystopia.

  • 8th grade econ

    @skh.pcola

    There's no such thing as a "wealthy socialist". If you're a socialist, you've renounced wealth, even if you don't realize it.

    What you're referring to are wealthy hypocrits; those who want everyone's wealth confiscated except their own. Their mouths spout socialism, their actions re: your property are socialist, their actions re: their own property are capitalist.

    @aynrandgirl

    "And will the Communist State of California take over the businesses of owners who can’t make their tax payment"

    Businesses as we know them would disappear. Intelligent people won't voluntarily become full slaves. One-third to one-half slaves is as far as they'll go (30% to 50% total tax on income and wealth: 25% Federal tax, + 10% State tax, + 5% local tax, + 5% sales tax, + 2% property tax, etc., etc., = ~50%.)

  • http://dullgeek.blogspot.com mjh

    Never wish for government to implement something dumb. Private business does a good job of correcting errors in judgment, of undoing the mistakes that are made. But it (literally and figuratively) takes an act of congress to get the government to undo something stupid. Consider the ethanol subsidies. Even the most strident lefties are saying it was a bad idea. It's created rising food prices and a worldwide food crisis. But the subsidies remain.

    Once the government does something, no matter how stupid, that thing will likely never die. So never wish for the government to do anything.

  • http://jrdonohue.com John Donohue

    Whenever I get someone extolling the morality of progressivism, social democracy, egalitarianism, socialism, I just look them in the eye and say "Is that volutary socialism or totalitarian socialism?"

  • happyjuggler0

    First thing that would happen it seems to me is that all houses worth over $20,000,000 would be sold to corporations.

    Second thing that would happen is that if poll numbers make it look like it will pass, "everyone" who has any money or who has an income of at least $150,000 will simply get up and leave the state.

    This would also destroy jobs that support those higher income and wealthy people. Silicon Valley will get up and move to either Austin, Texas or to Nevada. All of which would leave an even bigger gaping hole in the state's budget, not to mention massive unemployment.

    Anyway, I'll be voting no on the initiative in November, and urging everyone I know to do the same, and to also vote against any politician who endorses this sick communist proposition.

  • Dr. T

    Taxing property at 55% of assessed value is, in effect, a government taking. As such, it violates the Constitution (although that hasn't prevented other government takings). This is a perfect example of why democracy does not work in large populations. The 'tyranny of the majority' results in greedy takings followed by migration of the wealthy and the smart.

    I had always believed that California would be devastated by a natural disaster such as an 8.0 earthquake, but it looks like it will be devastated by voter-induced economic failure.

  • Jim Hart

    Directive 10-289?

  • John Dewey

    ""everyone" who has any money or who has an income of at least $150,000 will simply get up and leave the state."

    Haven't the very wealthy already started leaving? Professional golfers are leaving. Tiger Woods left California just before signing a $60 million annual contract with Nike. Natalie Gulbis left just as her income was jumping.

    As the Wall Street Journal points out:

    "data from the U.S. Census Bureau indicates that between 1996 and 2005, 1.3 million more Americans left than came to California …and evidence points powerfully toward high tax rates as the culprit.”

  • K

    These total madness initiatives come around often in CA. The very rich don't worry about them much.

    Anyway. The law says a ballot initiatives cannot be a collection of proposals. The courts will toss this one out on technical grounds.

    The richest don't have to be CA residents to enjoy life there. They just have to be careful about legal details. And they already are - taking legal and financial advice is routine. Most pay a lower rate than the electrician who earns $100K/year.

    There are always some who cannot avoid. The highly paid executive at a million or two per year. The honest small business owner. Those that cannot easily move out of state and cannot warp income into a form that does not appear to be income. Those with valuable real estate they must sell. Financial holdings such as stocks and bonds be moved away.

    The much heralded entertainment industry of CA pays a lot of tax, but much less than you might imagine. Read the credits and you will see that a dozen corporations are involved in making every movie. Most exist only to make a single movie and then vanish. They are headquartered in obscure tax havens and owned by the famous NoOneKnows.

    The liberal super rich and the entertainment industry applaud suggestions about big government and more taxes. They won't paying those higher taxes. That isn't they way they operate.

  • K

    These total madness initiatives come around often in CA. The very rich don't worry about them much.

    Anyway. The law says a ballot initiatives cannot be a collection of proposals. The courts will toss this one out on technical grounds.

    The richest don't have to be CA residents to enjoy life there. They just have to be careful about legal details. And they already are - taking legal and financial advice is routine. Most pay a lower rate than the electrician who earns $100K/year.

    There are always some who cannot avoid. The highly paid executive at a million or two per year. The honest small business owner. Those that cannot easily move out of state and cannot warp income into a form that does not appear to be income. Those with valuable real estate they must sell. Financial holdings such as stocks and bonds be moved away.

    The much heralded entertainment industry of CA pays a lot of tax, but much less than you might imagine. Read the credits and you will see that a dozen corporations are involved in making every movie. Most exist only to make a single movie and then vanish. They are headquartered in obscure tax havens and owned by the famous NoOneKnows.

    The liberal super rich and the entertainment industry applaud suggestions about big government and more taxes. They won't paying those higher taxes. That isn't they way they operate.

  • http://mayor-of-phx.blogspot.com/ John O.

    This Paul McCauley person has other nonsense pending for initiative status in California, including a proposal to enact term limits in the California Legislature and "campaign finance reform".

    -- John O.

  • Scott

    You guys are missing the point. They WANT everyone to leave. Returning Hetch Hetchy to its natural state means no water for all the folks in Northern Cal. If you can't tax them out, dehydrate them out.