When most states want to raise revenue, they do things to attract outside investment. When California wants to raise revenue, it does things to repel the investment it already has.
California has proposed Proposition 40, which is essentially a billionaire tax. It would function as a one-time tax of 5% on the total wealth of the 200 or so billionaires living in the state.
According to proponents of Proposition 40, they wanted to codify this “one-time” theft of assets because they want to erase the deficit due to the healthcare cuts ostensibly brought about by the One Big Beautiful Bill Act. Instead of allowing the cuts to remove the leeches and people who don’t need the extra healthcare money, California is seeking other ways to allow people to freeload off the government.
However, these proponents are nearsighted, because even if the tax pushes through as planned, there’s no guarantee it will produce anywhere near the money that they expect.
Since the wealth tax has been floated, multiple billionaires have already moved out of California. Google cofounders Larry Page and Sergey Brin, venture capitalist Peter Thiel, and a few others have already moved out of California — already a major hit to the wealth tax.
Furthermore, Facebook CEO Mark Zuckerberg has indicated he would leave California upon passage of the wealth tax, even stating he would place his $110 million estate on the market to get his residency out of California. With the exits of Page and Brin, Zuckerberg is the richest current Californian, and losing him would be a major blow to the viability of this tax and the state’s economy in general.
Zuckerberg says the wealth tax would force him to sell off a sizable portion of investments, to the point that he would lose his voting rights at Facebook. Since then, Meta has struck a deal with Zuckerberg to neutralize the impacts of this, but the threats were very real. I am not a huge fan of Zuckerberg, but I’d much prefer he cause his own downfall, not the government.
Even some Democrats see the error in these ways. The likes of Governor Gavin Newsom and former Congresswoman Katie Porter have joined the anti-wealth-tax camp. Porter went on to say some words of common sense: “You don’t get a second bite at tax policy. A tax that you pass has enduring consequences. When somebody leaves California, we can no longer tax them. That is a permanent problem. It is much harder to get tax base back than it is to grow it in the first place.”
The projected gains from a tax like this in the first round are only $30 billion, far from the stated goal of $100 billion, which would supposedly cover the deficit. Polling in the state for Proposition 40 is straight down the middle: 46% favor it, while 43% are opposed. There is a very real chance it could pass.
It seems that many Californians have accepted the reality that the lower class has effectively been freeloading off of welfare with little contribution to society, whereas the same class was paying taxes just a few decades ago. The burden on the upper and middle classes is the taxes they pay to prop up the lowest class of people.
The welfare state, designed to keep people pacified and poor, is slowly spreading, as the number of people whose primary income is government handouts is increasing and the number of upper- and middle-class people propping up the brunt of the economy is decreasing. One can only hope that this threat does not extend beyond California.
