Juliet Chung (WSJ): Rich Californians Are Finding Creative Ways to Get Ahead of the Billionaire Tax

With help from their phalanx of tax and trust-and-estate advisers, California’s ultrawealthy are getting creative in the face of the proposed billionaire tax. If it becomes law, it would tax the net worth of billionaires who resided in California as of Jan. 1 this year, based on their net worth at the end of the year.

Tax-and-estate advisers are also helping clients restructure their balance sheets to make them more tax-efficient. They are advising on the pros and cons of transferring real estate out of limited liability companies into clients’ own names or into revocable trusts. Real estate “held directly” by a taxpayer or a revocable trust isn’t included in net worth under the proposed tax because it already is subject to property taxes. Advisers are also presenting the option to clients of splurging on a vacation home that they have had in their sights and owning it outright or placing it into a revocable trust. 

Another strategy under discussion: buying expensive assets like art or yachts located outside the state and keeping them out of California, perhaps near or in an out-of-state vacation home. (The Act excludes from net worth “tangible personal property located outside California” if it has been outside the state for at least 270 days this year, assuming it hasn’t been temporarily moved “with a substantial purpose” of tax avoidance.) 

An approach that likely wouldn’t affect a person’s net-worth tally but could lower a tax bill, advisers said, is taking money from other investments and putting them into Treasurys, as federal law doesn’t allow states to tax Treasurys. 

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Whether any of the strategies ultimately works will depend on the specific facts in play, said David Gamage, a professor at the University of Missouri law school who helped draft the proposed tax.

E.B. Solomont (WSJ): California’s Tax-Weary Billionaires Seek Refuge on Lake Tahoe’s Nevada Shore

As wealthy Californians flee the state, deep-pocketed buyers are taking refuge in Nevada, which is starting to rival Florida as a tax haven for the elite. Amid surging demand for prime Tahoe property in Nevada, a recent string of megadeals reflects the premium buyers are willing to pay for a lower tax bill—and the widening price gap between the two sides of the lake.

Greg Ryan (Bloomberg Law): Boston Seizes on California Billionaire Tax to Lure AI Jobs

The talent at some of America’s hottest artificial intelligence companies often passes through Boston-area universities before heading west to build billion-dollar businesses in Silicon Valley. Massachusetts business and political leaders say California’s proposed tax on billionaires is an opportunity to change that.

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Of the 20 most valuable venture-backed US AI companies, half have co-founders who attended MIT or Harvard, according to PitchBook
 data. None of them are headquartered in Massachusetts.

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That calculus could change if California moves ahead with a proposed one-time 5% wealth tax on individual assets of more than $1 billion, mainly to fund healthcare.