California's Wealth Tax Could Cost the State $39 Billion
A Stanford University study estimates that California's proposed Proposition 40 could result in a net loss of $39 billion for the state.
Key Details of Proposition 40
- The Proposal: A one-time 5% net worth tax on California resident billionaires as of January 1, 2026 (excluding real estate, pensions, and retirement accounts).
- Revenue Projections vs. Reality: While supporters project the tax will raise roughly $100 billion (primarily for healthcare), Stanford economists Benjamin Jaros and Joshua Rauh estimate it will collect only about $30 billion to $36 billion.
- The Cost of Out-Migration: The study warns that the tax will drive ultra-wealthy residents out of California, causing an ongoing annual loss of $1 billion to $3.5 billion+ in state income taxes, pushing the net present value of the measure to a negative $38.9 billion.
- Political Split: Governor Gavin Newsom and various business groups oppose the measure, while progressive advocates support it. Voters will decide on the ballot initiative on November 3, 2026.
Links:
California Secretary of State Voter Guide: https://ca.gov
