Economists raise alarm on California wealth tax more than 100 sign letter against it

There is wide opposition to Proposition 40, the “billionaire tax,” among economists, both Democrat and Republican.Last week, I led a group of over 100 economists — including Nobel Laureates, former senior government officials and academics — in signing a letter opposing Proposition 40.The economists, who were already on the record against the tax, believe it’s simply bad public policy.

Some worked during Bill Clinton’s administration; some worked for George W.Bush and some have worked for President Donald Trump.

That gives you a sense of how bipartisan this opposition is.The biggest news, opinion and culture shaping California right now.

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Never miss a story Where do we start? Similar wealth taxes have been adopted by about a dozen countries in the past few decades, and nearly all of them have been abandoned for a similar list of reasons.Wealth taxes don’t make a very good form of tax.Why? The tax base is highly mobile.

Unlike property taxes, sales taxes and income taxes, it’s very easy to change one’s residence to avoid a wealth tax.Investment, capital and firms can move very easily to avoid such a tax.There are quite a few issues with California’s Proposition 40 wealth tax in particular: For one thing, it may not be legal.

It would be retroactive, hitting all California residents as of Jan.1, 2026, even though it would be approved almost a year later.

It’s not clear that a retroactive tax can pass legal and constitutional muster, even as a “one-time” tax.Oh, and there really is no such thing as a “one-time” tax.That’s why California voters are facing Proposition 3, which would make an earlier “one-time” income tax hike on the state’s highest earners permanent.From an administrative standpoint, administering the “billionaire tax” would require lots of accountants and ...