{"id":336238,"date":"2026-05-28T18:18:08","date_gmt":"2026-05-28T18:18:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/336238\/"},"modified":"2026-05-28T18:18:08","modified_gmt":"2026-05-28T18:18:08","slug":"proponents-of-californias-wealth-tax-unintentionally-make-the-case-against-it","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/336238\/","title":{"rendered":"Proponents of California\u2019s Wealth Tax Unintentionally Make the Case Against It"},"content":{"rendered":"

If the goal of the California wealth tax<\/a> is to reduce the state\u2019s wealth, the ballot initiative\u2019s proponents might be achieving their aims before the measure even appears on the ballot.<\/p>\n

In a new paper<\/a> making the case for the one-time 5 percent tax, Emmanuel Saez\u2014a U.C. Berkeley economics professor and one of the initiative\u2019s drafters\u2014and his Berkeley colleague Gabriel Zucman\u2014the godfather of the modern wealth-tax movement\u2014insist that critics are exaggerating the risk that billionaires will leave the state and thereby decimate its tax base. Yet virtually every page of their paper offers a new reason for billionaires to flee.<\/p>\n

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Saez, Zucman, and coauthor Jasper Boll frame California\u2019s surging billionaire wealth\u2014from an estimated $843 billion to $2.05 trillion in 2023\u2014as an undesirable further concentration of riches at the top. They also note that California billionaire wealth has grown by 8.2 percent in real terms since 1982, much faster than overall wealth figures.<\/p>\n

This analysis implies that 1982\u2019s billionaires kept getting richer while doing nothing. In fact, the growth the paper tracks is overwhelmingly the creation of new fortunes, not the appreciation of old wealth. In 1982, Gordon Getty was the wealthiest Californian, while Nvidia\u2019s Jensen Huang was washing dishes at Denny\u2019s, nine-year-old Larry Page and Sergey Brin knew nothing of Google, and Mark Zuckerberg hadn\u2019t even been born.<\/p>\n

These men all went on to create enormous wealth\u2014in part because there was no wealth tax to deter them. Had such a regime been in place when the AI wealth-creation surge began, the new tech almost certainly wouldn\u2019t have been created in California\u2014and maybe not at all.<\/p>\n

The wealth tax\u2019s architects\u2014including Saez himself, one of the California proposal\u2019s drafters<\/a>\u2014frequently insist that it\u2019s just a one-time transfer, so it won\u2019t affect any future decision-making. \u201c[A] permanent response to a one-time tax does not make economic sense,\u201d the paper asserts.<\/p>\n

Yet, the paper also spends four pages analyzing and making the case for a permanent annual wealth tax. Perhaps the reason many billionaires are making permanent responses to a \u201cone-time\u201d tax is that its proponents keep saying they want to make it permanent.<\/p>\n

Saez and company express confidence that the proposed tax will serve its purpose, even if it does drive many billionaires away. In their telling, the initiative\u2019s residency date, which requires that anyone resident in the state before January 1 of this year be subject to the tax, provides virtually no chance for affected taxpayers to escape. They expect that billionaires like Zuckerberg, who moved<\/a> earlier this year, will still be forced to pay out.<\/p>\n

The date, which initiative supporters say was chosen \u201cprecisely to prevent such behavioral responses,\u201d purportedly renders it \u201cdifficult if not impossible for billionaires to leave the state, i.e., meet of [sic] the stringent rules that the California tax law uses to determine that a taxpayer has effectively left the state.\u201d Expect to see this quote as an exhibit in future litigation over the constitutionality of the tax\u2019s residency requirements.<\/p>\n

Legal precedent suggests that tax changes can be retroactive, within limits. When upholding such tax changes, courts have used words like \u201cmodest\u201d to describe the retroactive policies they affirmed. The Supreme Court has twice struck<\/a> down<\/a> retroactive implementation of a \u201cwholly new tax,\u201d distinguishing this from modifying an existing tax.<\/p>\n

The proposed tax is anything but modest. It is not apportioned for those who depart California in 2026\u2014the full tax applies even if someone lives in California even just for the first month of the year\u2014and even extends to wealth acquired or accumulated post-departure, which may have no connection to California whatsoever. Furthermore, if the law tries to restrict movement between states that otherwise would have occurred, it will implicate the constitutional right to travel. Proponents strengthen this impression when they say that the tax was designed to foreclose the possibility of moving to avoid it.<\/p>\n

In reality, should voters approve the tax, investors and venture capitalists are likely to steer more of their investments toward startups based elsewhere that wouldn\u2019t be swept up in any future (potentially permanent) California wealth tax. And the creators of tomorrow\u2019s technology will increasingly look elsewhere rather than making a long-term bet on a tarnished Golden State. As a result, both California and America will be poorer\u2014and the wealth tax and its advocates will be to blame.<\/p>\n

Jared Walczak<\/a> is president of Walczak Policy Consulting, a senior fellow at the Tax Foundation, and the author of \u201cThe SALT Road<\/a>\u201d Substack.<\/p>\n

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