Hoover InstitutionStanford University
The Billionaire Wealth Tax: A Recipe for Economic Disaster

Published June 25, 2026

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.

Learn more from Joshua D. Rauh:

  • Read "The Net Present Value of the Billionaire Tax Act: An Assessment of the Fiscal Effects of California's Proposed Wealth Tax" by Joshua Rauh here.
  • Read "Sacramento created California’s budget problem — billionaire tax won’t fix it" by Joshua Rauh here.
  • Read "Medi-Cal and One Big Beautiful Bill: Federal Medicaid Reforms and the Fiscal Premise of California's Billionaire Tax Act" by Joshua Rauh here.

Learn more about Joshua D. Rauh here.

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The opinions expressed in this video are those of the authors and do not necessarily reflect the opinions of the Hoover Institution or Stanford University.

© 2026 by the Board of Trustees of Leland Stanford Junior University.

 

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Joshua D. Rauh

Joshua D. Rauh

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