Floor SpeechUrgent2026-01-15

MISGUIDED POLICY IN CALIFORNIA

TaxesTradeHousingInfrastructure

Context

On 2026-01-15, Representative Kevin Kiley (R-CA-3) delivered a floor speech titled "MISGUIDED POLICY IN CALIFORNIA" in the House. The speech addressed taxes and also covered trade policy, housing.

Full Text

MISGUIDED POLICY IN CALIFORNIA

Congressional Record, Volume 172 Issue 11 (Thursday, January 15, 2026) [Congressional Record Volume 172, Number 11 (Thursday, January 15, 2026)] [House] [Pages H915-H917] From the Congressional Record Online through the Government Publishing Office [ www.gpo.gov ] {time} 1200 MISGUIDED POLICY IN CALIFORNIA (Under the Speaker's announced policy of January 3, 2025, Mr. Kiley of California was recognized for 60 minutes as the designee of the majority leader. ) Mr. KILEY of California. Mr. Speaker, every so often there comes along a policy so misguided, so self-destructive, so just utterly stupid that it has catastrophic consequences before it is even adopted. Such is the case with the newly proposed wealth tax in the State of California, a proposal that is the height of folly, the height of insanity. The proposal would seize the assets, 5 percent of the net worth of citizens of our State who are purported to have a net worth over a billion dollars. Of course, that will simply be the first line that is drawn, with inevitably lower net worth levels ensnared in the future. This measure, which would be adopted this November and put into effect next year, has a peculiar provision in it stating that it would apply even to people who are no longer residents of the State at the time of its enactment. It would apply to anyone who was a resident of California up until January 1 of this year, even though it doesn't take effect until January 1 of next year. Those who would be affected by it got word that this is coming. Guess what they did? They made sure that they were not here as of January 1 of this year. For example, Larry Page and Sergey Brin, the founders of Google, have relocated from California because one analysis suggests that under this proposal the government could seize $60 billion from each of them. There are reports now that already $1 trillion in net worth has exited California simply in anticipation of this policy being adopted. They simply can't take the risk. One person with knowledge of the affected individuals said that 80 to 90 percent of them either will leave the State or have left already, not to mention those who don't quite meet that threshold but know that they will be next, who have already left or are looking at an exit strategy. The consequences of this growing exodus cannot be overstated when it comes to the future of our State. Number one, with all of these high- net-worth individuals leaving, they are, of course, taking all of the taxes that they pay with them, so the State Treasury no longer receives anything. Now, obviously, this is a drain on the Treasury. It would be in any State, but in particular in California because of the unusual extent to which our State relies on the highest earners. In some years, our State budget, our State income tax revenue gets 50 percent of its total revenues from the top 1 percent of earners. When you see those people leaving the State, it means that the house of cards that is our State's finances will come tumbling down. We also should note the impact this is going to have on the startup community in California, which is so central to our State's identity, vitality, and economic prosperity and so central to what has made California such a vital part of the American economy and such a driving force in progress all around the world. However, because this proposal would seize liquid assets, would demand 5 percent of an individual's net worth even though they are assessing assets of all kinds, what that would mean for a startup that has a very high paper value--based simply upon the way that startups receive their valuation, for example, based upon a multiple of an initial seed investment--then essentially you would have startups that would be forced to liquefy their assets or would simply not be able to pay this bill. Therefore, it would no longer be viable to be a startup in California. The entire ecosystem would cease to function as it does now. It is worth mentioning, by the way, that this exodus has been an ongoing phenomenon in California. It is not just limited to those who are of a high net worth. For the sixth straight year, U-Haul has just ranked California as number one in the country in outbound U-Haul rentals, in people leaving the State. It is usually not the wealthiest people. It is people who simply can't afford to get by in California because of the inordinately high cost of living. This proposed wealth tax would take this trend to an entirely new level in a way that would make it so California is a failed State, is no longer viable as a political entity. That is why we need to make sure that this provision does not pass. In addition, importantly, we need to make sure that the unconstitutional scheme whereby former residents would be ensnared is not allowed to even begin to be executed. That is why I am working on legislation here in the House of Representatives, Federal legislation to preempt that provision, which I believe is unconstitutional under the Commerce Clause, but we need to have express preemption in law to make sure that at the very least people do not feel the need to leave in anticipation of this measure or a future such measure passing. Now that we have discussed this absolutely insane proposal, I want to take a closer look at the California State budget as it now stands because this last week we got an announcement from the Governor that the State will be spending $348.9 billion in the coming fiscal year. Now, notably, that is a massive increase over what the State spent just last year, and it is nearly double what the budget was when Gavin Newsom became Governor in 2019. At the time Newsom was sworn in, our State budget was $197.5 billion, already quite high. During his tenure, he has increased the budget to $348.9 billion, in the process putting the State's finances in dire straits. A columnist for the San Francisco Chronicle noted that Newsom's gift to his successor is a $22 billion deficit. The State's nonpartisan legislative analyst came out with an absolutely scathing report, calling the State's financial situation and the Governor's budget ``alarming.'' The report raised ``serious concerns about the State's fiscal sustainability'' and noted that the Governor's budget does not materially address those concerns. This, by the way, isn't even to mention the massive around $1 trillion--shortfall when it comes to funding the State's long-term liabilities, the unfunded liabilities that we have in the State. Let's just look at this increase in the size of the budget. Remember, this wealth tax is being offered on the premise that we need even more revenue. Over the course of this Governor's tenure, California's budget has grown by 75.7 percent. Now, you might say, well, maybe that is what other States are doing, too. Surely, other States have increased their budget. However, they have not increased their budget nearly as much as California has. Florida, for example, has a $78.6 billion budget. That is compared to $349 billion in California. Over that same period, Florida's budget grew by 56 percent, Ohio's budget grew by 36 percent. You might say, well, those are red States, what about comparing California to other blue States? Well, Massachusetts' budget grew by 44 percent, New York's budget grew by 37 percent, while California's budget grew by 75.7 percent during that time period. Now, you might say, okay, we are spending more, but surely the people of California are getting something worthwhile in return for this massive increase in tax revenue, this massive [[Page H916]] increase in public expenditures. Surely, we are seeing major gains in the achievement of our students in schools. Surely, we have gotten beautiful new roads and transit systems. Surely, we are seeing the cost of living go down and the quality of life go up. However, no, quite the opposite has happened. Infrastructure in California remains among the worst in the country. Our roads are routinely rated among the three worst roads in terms of their condition anywhere in the country. We pay the highest gas taxes, yet drive over the deepest potholes. Despite tens of billions of dollars more being spent every year on education, educational achievement in California has flatlined, and we continue to have some of the most glaring achievement gaps of any State in the country. Meanwhile, the cost of living in California is the highest anywhere in the United States. We have the highest taxes. We have the highest cost of housing of any State other than Hawaii. We have the highest gas prices. We have the highest electricity prices, including the highest increase in electricity prices during Newsom's tenure as Governor compared to any other State. We are among the top two or three in the country when it comes to water bills. In every single dimension of affordability, California is the Nation's least affordable State. {time} 1210 Mr. Speaker, the Governor has utterly failed to justify asking our citizens to pay even more when they receive a historically, unfathomably low return on that investment. The fact is, the people of California continue to sacrifice more and more and get less and less in return. Now, Mr. Speaker, I will examine one of the reasons why that is the case. I will take a moment today to look at the vast waste, fraud, and abuse that exists in the State of California and the proposal that I am working on to bring the full scale, extent, and breadth of it to light so that we can work to address it using every tool that we have here at the Federal level and to compel changes at the State level. This is the simple reality: Every single time there has been any sort of independent audit of a program in California, the results have been the same. There has been mind-boggling waste and fraud identified, and the causality has been identified as unbelievable negligence and neglect on the part of the State, its agencies, and its government. I will list just a few ex

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MISGUIDED POLICY IN CALIFORNIA Congressional Record, Volume 172 Issue 11 (Thursday, January 15, 2026) [Congressional Record Volume 172, Number 11 (Thursday, January 15, 2026)] [House] [Pages H915-H917] From the Congressional Record Online through the Government Publishing Office [ www.gpo.gov ] {time} 1200 MISGUIDED POLICY IN CALIFORNIA (Under the Speaker's announced policy of January 3, 2025, Mr. Kiley of California was recognized for 60 minutes as the designee of the majority leader. ) Mr. KILEY of California. Mr. Speaker, every so often there comes along a policy so misguided, so self-destructive, so just utterly stupid that it has catastrophic consequences before it is even adopted. Such is the case with the newly proposed wealth tax in the State of California, a proposal that is the height of folly, the height of insanity. The proposal would seize the assets, 5 percent of the net worth of citizens of our State who are purported to have a net worth over a billion dollars. Of course, that will simply be the first line that is drawn, with inevitably lower net worth levels ensnared in the future. This measure, which would be adopted this November and put into effect next year, has a peculiar provision in it stating that it would apply even to people who are no longer residents of the State at the time of its enactment. It would apply to anyone who was a resident of California up until January 1 of this year, even though it doesn't take effect until January 1 of next year. Those who would be affected by it got word that this is coming. Guess what they did? They made sure that they were not here as of January 1 of this year. For example, Larry Page and Sergey Brin, the founders of Google, have relocated from California because one analysis suggests that under this proposal the government could seize $60 billion from each of them. There are reports now that already $1 trillion in net worth has exited California simply in anticipation of this policy being adopted. They simply can't take the risk. One person with knowledge of the affected individuals said that 80 to 90 percent of them either will leave the State or have left already, not to mention those who don't quite meet that threshold but know that they will be next, who have already left or are looking at an exit strategy. The consequences of this growing exodus cannot be overstated when it comes to the future of our State. Number one, with all of these high- net-worth individuals leaving, they are, of course, taking all of the taxes that they pay with them, so the State Treasury no longer receives anything. Now, obviously, this is a drain on the Treasury. It would be in any State, but in particular in California because of the unusual extent to which our State relies on the highest earners. In some years, our State budget, our State income tax revenue gets 50 percent of its total revenues from the top 1 percent of earners. When you see those people leaving the State, it means that the house of cards that is our State's finances will come tumbling down. We also should note the impact this is going to have on the startup community in California, which is so central to our State's identity, vitality, and economic prosperity and so central to what has made California such a vital part of the American economy and such a driving force in progress all around the world. However, because this proposal would seize liquid assets, would demand 5 percent of an individual's net worth even though they are assessing assets of all kinds, what that would mean for a startup that has a very high paper value--based simply upon the way that startups receive their valuation, for example, based upon a multiple of an initial seed investment--then essentially you would have startups that would be forced to liquefy their assets or would simply not be able to pay this bill. Therefore, it would no longer be viable to be a startup in California. The entire ecosystem would cease to function as it does now. It is worth mentioning, by the way, that this exodus has been an ongoing phenomenon in California. It is not just limited to those who are of a high net worth. For the sixth straight year, U-Haul has just ranked California as number one in the country in outbound U-Haul rentals, in people leaving the State. It is usually not the wealthiest people. It is people who simply can't afford to get by in California because of the inordinately high cost of living. This proposed wealth tax would take this trend to an entirely new level in a way that would make it so California is a failed State, is no longer viable as a political entity. That is why we need to make sure that this provision does not pass. In addition, importantly, we need to make sure that the unconstitutional scheme whereby former residents would be ensnared is not allowed to even begin to be executed. That is why I am working on legislation here in the House of Representatives, Federal legislation to preempt that provision, which I believe is unconstitutional under the Commerce Clause, but we need to have express preemption in law to make sure that at the very least people do not feel the need to leave in anticipation of this measure or a future such measure passing. Now that we have discussed this absolutely insane proposal, I want to take a closer look at the California State budget as it now stands because this last week we got an announcement from the Governor that the State will be spending $348.9 billion in the coming fiscal year. Now, notably, that is a massive increase over what the State spent just last year, and it is nearly double what the budget was when Gavin Newsom became Governor in 2019. At the time Newsom was sworn in, our State budget was $197.5 billion, already quite high. During his tenure, he has increased the budget to $348.9 billion, in the process putting the State's finances in dire straits. A columnist for the San Francisco Chronicle noted that Newsom's gift to his successor is a $22 billion deficit. The State's nonpartisan legislative analyst came out with an absolutely scathing report, calling the State's financial situation and the Governor's budget ``alarming.'' The report raised ``serious concerns about the State's fiscal sustainability'' and noted that the Governor's budget does not materially address those concerns. This, by the way, isn't even to mention the massive around $1 trillion--shortfall when it comes to funding the State's long-term liabilities, the unfunded liabilities that we have in the State. Let's just look at this increase in the size of the budget. Remember, this wealth tax is being offered on the premise that we need even more revenue. Over the course of this Governor's tenure, California's budget has grown by 75.7 percent. Now, you might say, well, maybe that is what other States are doing, too. Surely, other States have increased their budget. However, they have not increased their budget nearly as much as California has. Florida, for example, has a $78.6 billion budget. That is compared to $349 billion in California. Over that same period, Florida's budget grew by 56 percent, Ohio's budget grew by 36 percent. You might say, well, those are red States, what about comparing California to other blue States? Well, Massachusetts' budget grew by 44 percent, New York's budget grew by 37 percent, while California's budget grew by 75.7 percent during that time period. Now, you might say, okay, we are spending more, but surely the people of California are getting something worthwhile in return for this massive increase in tax revenue, this massive [[Page H916]] increase in public expenditures. Surely, we are seeing major gains in the achievement of our students in schools. Surely, we have gotten beautiful new roads and transit systems. Surely, we are seeing the cost of living go down and the quality of life go up. However, no, quite the opposite has happened. Infrastructure in California remains among the worst in the country. Our roads are routinely rated among the three worst roads in terms of their condition anywhere in the country. We pay the highest gas taxes, yet drive over the deepest potholes. Despite tens of billions of dollars more being spent every year on education, educational achievement in California has flatlined, and we continue to have some of the most glaring achievement gaps of any State in the country. Meanwhile, the cost of living in California is the highest anywhere in the United States. We have the highest taxes. We have the highest cost of housing of any State other than Hawaii. We have the highest gas prices. We have the highest electricity prices, including the highest increase in electricity prices during Newsom's tenure as Governor compared to any other State. We are among the top two or three in the country when it comes to water bills. In every single dimension of affordability, California is the Nation's least affordable State. {time} 1210 Mr. Speaker, the Governor has utterly failed to justify asking our citizens to pay even more when they receive a historically, unfathomably low return on that investment. The fact is, the people of California continue to sacrifice more and more and get less and less in return. Now, Mr. Speaker, I will examine one of the reasons why that is the case. I will take a moment today to look at the vast waste, fraud, and abuse that exists in the State of California and the proposal that I am working on to bring the full scale, extent, and breadth of it to light so that we can work to address it using every tool that we have here at the Federal level and to compel changes at the State level. This is the simple reality: Every single time there has been any sort of independent audit of a program in California, the results have been the same. There has been mind-boggling waste and fraud identified, and the causality has been identified as unbelievable negligence and neglect on the part of the State, its agencies, and its government. I will list just a few ex