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Healthcare workers rally in support of a billionaire tax during a media briefing on April 27 in Los Angeles. An initiative for the tax to levy a one-time 5% tax on California billionaires has enough signatures to be on the November ballot.<\/p>\n
Frederic J. Brown\/AFP\/Getty Images<\/p>\n
Supporters of a prospective voter initiative that would impose a one-time, 5% tax on California billionaires say they have collected more than enough signatures for its inclusion on the November ballot.\u00a0<\/p>\n
The proposed stopgap measure, which is sponsored by two powerful labor unions, would tax the roughly 200 California residents whose assets exceed $1 billion. Ninety percent of the collected revenue would go to restore House Resolution 1\u2019s\u00a0cuts to healthcare, while 10% would go toward public education and state food assistance programs.<\/p>\n
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We asked two University of California faculty members with opposing views\u00a0\u2014 UC Davis law professor Darien Shanske and UC Berkeley economics professor Enrico Moretti\u00a0\u2014 to weigh in on the measure. After reading each take, please vote on which one you agree with more in our poll.<\/p>\n
Ask billionaires to pay their fair share<\/p>\n
As a community, Californians must decide who pays how much for the essential services we all rely on. In general, we have quite reasonably decided that the greater a person\u2019s ability to pay, the more that person should pay. The problem, however, is that that\u2019s not currently the case.<\/p>\n
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<\/p>\n Add Preferred Source<\/p>\n <\/a><\/p>\n Take, for instance, the structure of the income tax. The U.S. and California governments generally evaluate one\u2019s ability to pay based on one\u2019s income, taxing those earnings. But many billionaires don\u2019t earn much in traditional salaries, and hence many billionaires don\u2019t pay much, if any, income tax<\/a>\u00a0\u2014 certainly not in proportion to their ability to pay.<\/p>\n Article continues below this ad<\/p>\n What\u2019s more, neither the U.S. nor California taxes wealth accumulated through stocks or other intangible means, so billionaires end up contributing far less proportionately of their economic income than the rest of us. Middle-class people already pay an annual 1% (approximately) wealth tax\u00a0\u2014 this is generally known as the property tax, which is a wealth tax on a small slice of the kind of wealth that middle-class people have (and note that the property tax used<\/a> to reach the kind of intangible wealth that billionaires have).<\/p>\n Perhaps these gaps in our tax system wouldn\u2019t matter so much if the rest of the system were efficiently and fairly paying for essential services, but that simply isn\u2019t the case. For example, to help pay for staggeringly regressive<\/a> and poorly designed<\/a> tax cuts for the ultra wealthy, the Trump administration slashed roughly\u00a0$100 billion from<\/a> California\u2019s healthcare system<\/a> over the next five years. Cuts that big will strip health insurance from millions of people<\/a> and many of the hospitals and emergency rooms that we all rely on will be forced to close<\/a>.\u00a0<\/p>\n This is exactly why a modest, one-time tax on billionaires is so urgently needed, and why my co-drafters and I crafted the California Billionaire Tax Act.<\/a><\/p>\n We designed<\/a> the tax based on models that have shown themselves to be administrable and fair. Among other key features: The modest, one-time tax has a five-year payment plan option (with a small deferral charge), an outright deferral option for billionaires who are illiquid and straightforward default formulas to value non-public assets.<\/p>\n To be clear: California is governed by a balanced budget rule<\/a>, so it cannot just borrow to forestall these cuts and hope that the federal government regains its senses.<\/p>\n Article continues below this ad<\/p>\n Nor should we be fooled by possibly well-intentioned counter-proposals\u00a0that are not shovel-ready. Federal healthcare cuts are here now. Thousands of healthcare workers have already been laid off. Speaking of which, despite fear-mongering to the contrary, no voter should be scared<\/a> into abandoning their common sense by the threats of billionaires moving. There is\u00a0little evidence<\/a> to suggest that those fears are warranted. In any event, the deadline to change residency for purposes of this tax has passed.<\/p>\n At the end of the day, public policy is about choices. We can choose to let these catastrophic cuts happen. Or we can choose to reverse the Robin Hood structure of our tax system by finally asking billionaires to chip in for the essential public services we all rely on.\u00a0\u00a0<\/p>\n Darien Shanske is a professor of law at UC Davis and co-author of the California Billionaire Tax Act.<\/p>\n Tax will hurt California, benefit Texas and Florida<\/p>\n The billionaire tax risks damaging California\u2019s economy for years to come. Based on my own research and a growing body of evidence on how high earners respond to state taxation, I believe this tax will make the state meaningfully less attractive to the next generation of startup founders and reduce jobs for Californians. The true cost of this measure will not be paid by billionaires, but by California workers. The main winners will be low-tax red states like Texas and Florida.<\/p>\n Article continues below this ad<\/p>\n