US wealth tax push may have stalled, but Canberra is watching closely

Detailed summary

California may have rejected a wealth tax, but will it signal change here?

Attention riveted to the blue wave in last week's mid-term elections clouded over the fleet of state-specific proposals Americans also voted on.

But some were of real consequence, not least because of our tendency to be influenced by what happens on the other side of the Pacific.

One proposal in California is of particular interest because of the size and economic importance of the state, the audacity of the proposal and the intensity of the campaign.

Remember that these proposals - or "propositions" as they are labelled in California - become law if they win a simple majority. They are not initiated by governments but are put to a vote if enough citizens petition for it.

Proposition 40 was for a one-off wealth tax of 5 per cent on Californian residents with a net worth of $US1 billion (about $A1.4 billion) or more, subject to a few exclusions.

This would have affected about 200 billionaires; many of them in Silicon Valley and related areas and activities. It was to apply retrospectively to residents as of January 1 this year, but to their net worth as of December 31.

With almost 90 per cent of the votes counted at time of writing, this proposition appears to have been defeated by just less than 53 per cent.

Had Proposition 40 passed, it would have been an egregious exercise of the power of taxation as legalised theft. And it is very unlikely to have been a one-off as advertised.

Few people have an affinity with billionaires. But they have built that level of wealth by taking huge risks along the way and, along with their own personal successes, have created enormous economic activity, wealth and consumer welfare for countless others both inside their firms and in the wider community.

Opening of the article, excerpted from The Canberra Times. To read the rest, open the article on the publisher's site.