Hoover Institution (Stanford, CA) — California’s proposed one-time wealth tax on billionaires would leave the state worse off by an estimated $25 billion once lost income tax revenue is considered, according to new research by Hoover Institution scholars.
The study, by Senior Fellow Joshua D. Rauh, Research Fellow Benjamin Jaros, Research Associate Gregory Kearney, and research analysts John Doran and Matheus Cosso, finds that the one-time levy would collect approximately $40 billion in wealth tax revenue, less than half of the roughly $100 billion projected by proponents. This is because many billionaires have already departed California, even before the initiative has qualified for the ballot.
Furthermore, because the departures by billionaires eliminate their future state income tax contributions, the researchers estimate that the measure would produce a negative net present value under most scenarios.
"Our analysis finds that the billionaire tax is likely to raise far less revenue than advertised, and once lost income tax revenue from departures is considered, it is likely to leave California worse off financially,” said Rauh.
The authors used data from the 2025 Forbes Billionaire List, news reports detailing the residential real estate holdings of California billionaires, and public announcements of billionaire departures from the state to construct a person-by-person estimate of the tax base and its erosion.
Six billionaires publicly departed California between the initiative's filing and the January 1, 2026, residency snapshot date, removing $536 billion, or nearly 30 percent of aggregate billionaire wealth, from the tax base. The authors estimate that many more may have left without a public announcement. The loss of both the wealth tax revenues and future income tax revenues from these departures lead to the state losing money on net, the authors explain.
The 2026 California Billionaire Tax Act (Initiative No. 25-0024) would impose a 5 percent, one-time excise tax on the worldwide net worth exceeding $1 billion of individuals who were California residents as of January 1, 2026. It amends the state constitution to permanently remove California’s cap on taxes on intangible personal property.
If 875,000 or more signatures in favor of the ballot proposition are gathered and accepted by June 2026, California will vote on the initiative in November 2026. If passed, it would be the first major tax on general wealth in United States history.
Read the full paper published on SSRN here.
The authors have also provided a summary essay at the Liberty Lens Substack.
For coverage opportunities, contact Jeffrey Marschner, 202-760-3187, jmarsch@stanford.edu.
