California Billionaire Tax: Two Estimates, $139 Billion Gap

California voters decide on November 3 whether to adopt the nation's first wealth tax for billionaires.

Two major economic studies published this week offer starkly different projections for Proposition 40.

Gabriel Zucman of UC Berkeley and the Paris School of Economics estimates the tax will generate about $100 billion in new revenue.

Joshua Rauh of Stanford University and Benjamin Jaros estimate the measure will actually cost the state $39 billion.

The tax imposes a one-time 5% charge on the net worth of individuals who resided in California on January 1, 2026.

Proceeds are designated primarily to fund healthcare for low-income residents, offsetting recent federal cuts to Medicaid.

Zucman and colleagues Jasper Boll and Emmanuel Saez base their calculation on a total billionaire wealth figure of $2.3 trillion.

They note that California billionaire wealth grew by 144% between 2023 and 2025, driven largely by the artificial intelligence sector.

The researchers reduced their projected revenue by 10% to account for potential avoidance, evasion, and residency changes.

Rauh argues that this 10% reduction is too optimistic.

He claims that at least seven prominent billionaires have already left the state before the January 1 cutoff.

The list includes Larry Page, Sergey Brin, Peter Thiel, Don Hankey, Steven Spielberg, Travis Kalanick, and David Sacks.</br> Rauh calculates that these departures alone eliminate roughly $30 billion in potential revenue.</br> Zucman disputes this view.</br> He argues that legal experts he consulted believe it is unlikely these individuals successfully ended their California tax residency.</br> He points to Sergey Brin, who moved to the Nevada side of Lake Tahoe but still commutes to Silicon Valley for work.</br> Rauh counters that Brin has likely secured Nevada residency with the help of high-cost legal teams.</br> Beyond the residency fight, Rauh points to constitutional risks.</br> He warns that billionaires will challenge the tax in court, particularly its retroactive nature and its reach into global assets.</br> He argues that taxing wealth held outside California may create legal hurdles that could strike down parts of the law.</br> Support for the measure has drawn heavy opposition from wealthy donors.</br> A recent report in The New York Times indicates that superrich opponents have poured $333 million into a group dedicated to defeating Prop 40.</br> The debate echoes past global experiences with wealth taxes, which Zucman describes in his new book as mostly failures due to loopholes and migration.</br> Proponents of Prop 40 say they have designed the current tax to close those specific loopholes by including business holdings and limiting the window for relocation.