Critics Question Viability of California’s Proposed Billionaire Wealth Tax
A letter signed by six Nobel-winning economists backs Proposition 40, a one-time 5% tax on California billionaires, but analysts argue the claim’s facts are flawed.
A group of six Nobel-Prize-winning economists recently signed a public letter urging voters to approve Proposition 40, a one-time 5% levy on the net wealth of California’s billionaires. The letter claims the tax would be the first of its kind and generate $100 billion for state programs, but experts dispute these assertions. Historical wealth taxes in twelve European nations during the 1990s produced minimal revenue, were costly to administer, and most have been repealed.
California’s own Legislative Analyst’s Office projects only “tens of billions” in receipts and warns the tax could shrink the broader income-tax base as wealthy residents relocate. Indeed, figures such as Sergey Brin, Larry Page, Peter Thiel, Don Hankey, Travis Kalanick, Steven Spielberg and David Sacks have reportedly left the state before the Jan. 1, 2026 deadline. Legal scholars also flag up to eight potential constitutional violations. The debate highlights broader questions about the effectiveness of wealth taxes and their impact on the state’s fiscal health.
Why it matters
The proposal could reshape California’s tax system and affect billions in wealth and state revenue.
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