New Jersey’s “Millionaire Tax” Could Come to California?

New Jersey’s “Millionaire Tax” Could Come to California?

Hi there and thank you for stopping by. Today we are going to talk about the millionaire tax. I am Tina Anders, Fee Only Certified Financial Planner for my firm here in Petaluma, California serving primarily Sonoma and Marin counties. Here to talk to you about the millionaire tax.

New Jersey announced a plan to raise income taxes for every dollar earned between $1 million dollars and $5 million to fight financial realities of COVID-19. Some people are calling this the millionaire tax. The wealth tax on its millionaires will be in an effort to fight the financial realities exacerbated by the ongoing COVID-19 pandemic. And it could be finalized as soon as this month, October 2020.

It’s estimated that the tax increase could bring in $390 million in revenue just in the fiscal year of 2021. This begs the question, “will wealthy residents leave to avoid the millionaire tax?” While some lawmakers say that tax will undo years of tax inequities and help make up for shortfalls that are caused by the pandemic. Others say it will cause wealthy residents to leave the state.

New York legislators are floating something similar. But New York Governor Andrew Cuomo opposes the idea with the same concern increasing taxes on the rich to help cover COVID related deficits is difficult if you don’t want to chase away the residents in your state. California is also considering a millionaire tax that would add surcharges to higher income earners and those with high net worth excluding directly held real estate. So, no worries there. In addition, the millionaire tax in New Jersey could disincentivize work from home relocations in addition to chasing away some existing millionaires. Will other states follow suit? We don’t know but it certainly seems possible.

Keep your eye on the news and if you’d like to comment on this video, or you have a topic of particular interest that you’d like to see me do a video in the future, please comment below. Tina Anders Anders Wealth Management in your corner thank you for stopping by.