California is Ground Zero for American Descent Into Neo-Socialist Misery

The election of Zohran Mamdani as New York’s first socialist mayor creates a dilemma for the still historically unpopular Democrats. Some elements of the party – notably those based around the Democratic Socialists of America (DSA) – favour massive redistribution of income from the wealthy, while the traditionally dominant gentry liberals fear a loss of support from the oligarch class (particularly leading figures in industries like tech), who until recently had funded their campaigns.

The front line of this conflict today lies in California, where Democrats traditionally align with the moguls in Silicon Valley and Hollywood. The new breed of Leftists, however, wants to expand the welfare state even as the state economy underperforms. They have no tolerance for billionaires, except as objects of extraction.

To be clear, the “moderate” gentry liberals still favour an ever-expanding welfare state, financed by the top 1%, who contribute some 40% of the state’s income taxes. But the Left wants more and aims to get it. In a startling move, a powerful union – the SEIU-United Healthcare Workers West – is working to place before voters a wealth tax that would seek to mine not only the unrealised capital gains of billionaires, but to potentially tax them even when they have left the state.

The proposed initiative would impose a 5 per cent tax on the net worth of billionaires – apparently including everything from investments and property to jewellery and paintings – residing in California, allowing them to pay off the obligation over five years. The revenue would go into a special fund, with 90pc reserved for healthcare spending and 10pc for the state’s failing K-12 education system, sectors dependent on state spending.

Yet California’s regulatory and tax regime are a key reason for a dwindling fiscal base. It is seen in the high rates of migration by the middle class hoi polloi. But now, more of the upper crust are moving. In 2021 alone, the departure of wealthy people cost the state an estimated loss of $20.4bn in taxable income.

Now with the wealth tax looming, several prominent oligarchs, including venture capitalist Peter Thiel, have taken steps to cut ties with California. From his personal acquaintances, venture capitalist Chamath Palihapitiya claims the state has lost $1tn in wealth.

Read the rest of this piece at Yahoo.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.