Billionaires fleeing California's wealth tax could cost the state more than the levy makes, Stanford economists say
A Stanford paper says billionaire departures could make California's one-time tax a $38.9 billion long-term loss, despite billions raised upfront.
A Stanford paper warns California could lose more than it gains from a proposed billionaire wealth tax, according to a working paper shared by Stanford economists Benjamin Jaros and Joshua Rauh. The tax, if passed, would impose a one-time 5% levy on billionaires with wealth valued at the end of 2026, funding healthcare initiatives.
While supporters project the tax to generate between $28 billion and $36 billion, the Stanford economists estimate it could collect even less, around $30 billion. They caution that the state may face significant losses if the wealthy flee the state, as those departing billionaires could stop paying state income taxes annually. Seven identified billionaires, accounting for nearly 30% of the taxable wealth, have already left California before the residency cutoff.
If billionaire departures and lost payments persist, their model projects an average net loss of $38.9 billion for California.
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