A ballot initiative that would impose a wealth tax on California\u2019s billionaires could be the start of a global trend, according to six Nobel Prize-winning economists.<\/p>\n
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In a letter published on Saturday, they endorsed the state\u2019s Proposition 40, which calls for residents worth more than $1 billion to pay a one-time tax equivalent to 5% of their assets.<\/p>\n
The letter\u2019s signatories, who have previously backed wealth taxes or higher income taxes on the ultra wealthy, include Daron Acemoglu, Abhijit Banerjee, Peter Diamond, Esther Duflo, Paul Krugman and Joseph Stiglitz.<\/p>\n
\u201cCalifornia is the right place to take this historic step,\u201d they wrote. \u201cThe explosive growth of the state\u2019s billionaires over the past few decades has made it one of the most unequal places in America.\u201d<\/p>\n
The economists estimated that California\u2019s 250 billionaires are collectively worth $2.3 trillion, and the state income taxes they paid amounted to\u00a0only 1.6%\u00a0of their $1.4 trillion wealth gain from 2019 to 2025.<\/p>\n
The number of billionaires could expand as SpaceX went public in June, with Anthropic planning its own IPO later this year and OpenAI potentially following next year.<\/p>\n
While billionaires have \u201cmade important contributions,\u201d the letter added, they have also been \u201camply rewarded\u201d and have used loopholes to avoid taxes on capital returns, allowing their wealth to compound further.<\/p>\n
Opponents of the tax have warned about the impact it could have on economic growth and startups. They have also said the tax would force founders to sell big pieces of their companies. <\/p>\n
Supporters point to the AI boom and say California\u2019s ultra-rich would still be among the world\u2019s wealthiest. The union pushing Prop 40, the Service Employees International Union-United Healthcare Workers West, has said the wealth tax could raise $100 billion in revenue and help offset federal cuts to health spending.<\/p>\n
The ballot measure has split the state\u2019s political and business leaders. Gov. Gavin Newsom is against it, while U.S. Rep. Ro Khanna is for it. But even the congressman has conceded he doesn\u2019t want illiquid stakes or voting shares to be taxed. Some unions have also come out in opposition, saying other areas of state spending should be priorities too.<\/p>\n
Meanwhile,\u00a0Nvidia\u00a0CEO Jensen Huang said he\u2019s \u201cperfectly fine\u201d with it,\u00a0while\u00a0Google cofounder Sergey Brin contributed over $100 million\u00a0toward opposing the billionaire tax.<\/p>\n
The Nobel laureates argued that the tax will not doom Silicon Valley, saying California has attracted\u00a080% of all new venture capital funding in the U.S. since the start of 2026, up from about 50% before 2025. That\u2019s despite fears of the tax surfacing among billionaires in late 2025.<\/p>\n
Critics of Prop 40 have also warned California\u2019s levy is unlikely to be a one-time deal, and the letter sees a similar levy on billionaires elsewhere.<\/p>\n
\u201cIf the state that houses some of the country\u2019s most powerful billionaires votes to tax their wealth, it will kickstart a movement to tax ultra-high-net-worth individuals in other states \u2014 and eventually at the federal level and in other countries,\u201d the economists wrote. \u201cAs Californians head to the polls, their vote may well come to be seen as a turning point in the battle between democracy and oligarchy.\u201d<\/p>\n
But Californians are narrowly divided on the wealth tax, and passage could come down to the wire when voters cast ballots in November.<\/p>\n
A recent poll from the Public Policy Institute of California found that 52% of likely voters would vote yes on the tax, and 46% would vote no.<\/p>\n
At the same time, competing ballot measures that would nullify Prop 40 also have majority support. The poll showed Proposition 41, which would make any new taxes subject to the state\u2019s existing spending limit, has a lead of 51% in favor versus 44% against.<\/p>\n
And Proposition 42, which would prohibit taxes on financial assets and personal property other than real estate, is leading 54% to 43%.<\/p>\n
\u201cSupporters of Proposition 40, the so-called billionaire tax initiative, have a lot of work to do,\u201d said Mark Baldassare, the survey\u2019s director, told KQED.<\/p>\n<\/div>\n
#Californias #billionaire #tax #kickstart #movement #spreads #states #countries<\/p>\n","protected":false},"excerpt":{"rendered":"
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<\/p>\n