Will California's Billionaire Tax Act lead to long-term revenue losses?
Core argument: California’s billionaire tax drives $3.53bn–$4.49bn in annual ongoing revenue losses, exceeding one-time collections and resulting in net fiscal harm.
This paper estimates ongoing annual reductions in state tax revenue under scenarios based on announced and anticipated billionaire departures. The analysis considers direct impacts on individual income and, to a much lesser extent, sales tax collections, along with spillover effects. We identify 212 California billionaires using the Forbes billionaire list and classify each based on whether their wealth is primarily held in publicly traded equity, a privately held operating business, financial fund management, or a diversified mix of sources. We use classification-specific assumptions of income loss subject to a given billionaire’s departure, assuming that only 5% of public founders’ income will remain California source after a departure, compared to 55 percent for private operating business owners, 35% for financial management, and 15% for diversified wealth. 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 emigres 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.