California’s proposed Billionaire Tax Act would impose a “one-time” 5% tax on the worldwide net worth of individuals with more than $1 billion in assets. Supporters estimate it could raise roughly $100 billion to help address California’s budget pressures, but that projection depends on a static assumption: that billionaires, their assets, and their future income remain in the state.
The evidence suggests otherwise. Once billionaire departures are taken into account, projected revenue falls to roughly $40 billion, before accounting for the loss of regular income-tax revenue from those who leave. The measure would also remove California’s constitutional limit on taxes on intangible property, making future wealth taxes easier to impose. A tax presented as a fiscal solution could instead weaken investment, reduce employment, and erode the revenue base on which the state depends