California is like a junkie addicted to spending, and to get its fix, it needs taxes. To raise the revenues, California is doing a lot of damage. Jared Walczak, a visiting fellow at the California Tax Foundation, has run the numbers and says that reported departures of billionaires who would be subjected to California’s latest wealth tax proposal already total $777 billion, and could be higher if “quiet departures” are included. He writes:
Reported departures already total $777 billion, with the likelihood of further departures, including many “quiet departures” that do not draw media coverage.
Walczak estimates that the wealth tax will do real damage to California’s revenues, summarizing his findings as:
Under our primary scenarios, the wealth tax yields ongoing reductions of $3.53 billion to $4.49 billion per year in income, sales, and other tax collections. Calculations based exclusively on the nine publicly identified billionaire emigrees yield $2.77 billion in recurring revenue loss and can be regarded as a lower bound. Actual out-migration almost certainly already exceeds that which has been publicly reported, and continued departures should be expected should the initiative advance.
Walczak concludes:
The 2026 California Billionaire Tax Act is, at least for now, a one-time tax. Its effects on the rest of California’s tax base, however, could be substantial and persistent. The implementation of this wealth tax, moreover, could affect future decisions about where to locate tech startups and other businesses, by increasing the perceived likelihood of future wealth taxation. The chilling effect on future California investment is beyond the scope of this analysis, but represents a significant further economic risk for a state so reliant on technological innovation.
Action Line: Is California willing to suffer the damage of its own attempt to tax its wealthiest residents? The sun might just set on California once and for all if it succeeds in driving out all its wealthiest residents with this tax proposal. Click here to subscribe to my free monthly Survive & Thrive letter.
