California's Billionaire Tax Fantasy Comes With a $25 Billion Hole
Stanford study: proponents promise $100 billion. Reality: negative $25 billion after billionaires flee. Six people removed 30% of the tax base. #California
California's Billionaire Tax Fantasy Comes With a $25 Billion Hole
California progressives are back with another brilliant idea. Tax the rich harder, promise a mountain of money, and act shocked when rich people discover U-Haul exists.
According to a new study led by Joshua D. Rauh, a Hoover Institution senior fellow working with a Stanford-based team, California's proposed 2026 Billionaire Tax Act would not be the jackpot its supporters claim. It would be a fiscal own goal. Proponents say the measure would generate $100 billion. The study says the real haul would be closer to $40 billion. And once you factor in the income tax revenue California loses when wealthy residents leave, the state comes out $25 billion behind.
What the Proposal Actually Does
The 2026 Billionaire Tax Act would impose a 5 percent one-time excise tax on worldwide net worth above $1 billion for California residents as of January 1, 2026. If 875,000 signatures are gathered by June, voters decide in November. If enacted, it would be the first major tax on general wealth in U.S. history.
The initiative also amends the state constitution to lift California's cap on taxes on intangible personal property. It has no sunset provision. So this is not just one tax. It is a foundation. As the study warns, it creates "constitutional infrastructure on which future wealth taxes could be built."
People Move
Six billionaires publicly left California between the filing of the initiative and the January 1, 2026 residency snapshot date. Those six departures alone removed $536 billion from the tax base. That is nearly 30 percent of the aggregate billionaire wealth the tax was supposed to hit. Six people. Nearly a third of the base. Gone.
According to the Hoover and Stanford research:
Supporters claim the tax would raise $100 billion
The study estimates actual collections at about $40 billion
Six public departures removed $536 billion from the tax base
Net effect: negative $25 billion for the state
In 100,000+ simulations, 71% produced a negative net present value
Rauh's summary: "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."
Blue State Economics Keeps Repeating Itself
The left keeps treating wealthy taxpayers like an ATM bolted to the floor. They are not. They are mobile. Their capital is mobile. Their companies are mobile. Their accountants are definitely mobile.
California can keep pretending that confiscatory tax schemes are a substitute for sane governance. Or it can learn the lesson blue states keep refusing to learn: if you make success unwelcome, success leaves. And when it does, the bill lands on everybody else.