This has become a hotter topic lately as some attributes the stock decline to it.
On the China side, people are increasingly aware of the additional off-shore trust tax (2026年21号离岸信托公告 & 15号配套征管文件). The rules are effective as of July 24, 2026. For individuals covered by the rules, the principal tax rate is 20%, generally applied to gains, dividends and when transferring assets into an offshore trust.
On the US side, California wealth tax is being discussed. Proposition 40 would impose a one-time 5% wealth tax on California billionaires, including the value of their stocks, private businesses, investment portfolios and other taxable assets, as of Dec 31, 2026. It is on the November 3, 2026 ballot, targeting people who were California residents on January 1, 2026. A simple majority is required to pass Proposition 40, and it is subject to interaction with Props 41 and 42, which prohibit the change in tax.
The implications of higher taxes are profound here.
1/ Additional taxes cause market liquidity crunch – few people keep a lot of cash on the sideline.
2/ The market value is arbitrary. Lowering the market value / stock price will do the job. This creates additional downside risks.
3/ To me, tax is not something that should be easy to change. It’s part of the social fabric or “contracts”. This incentives people to do other unnecessary things.
However, we also need to realize that taxing wealth that ordinary income taxes do not fully capture is a thing that needs more attention.
I assume this may be a direction that many other places may welcome and try to duplicate.
Meanwhile, we might need innovative ways to tax other than ordinary income, or lower the tax on ordinary income to bridge the gap.