California’s Wealth Tax: Let’s Go Serfin’

By Andrew Stuttaford

Tuesday, April 28, 2026

 

In the most recent Capital Letter, I wrote about Elizabeth Warren’s proposed Ultra-Millionaire Tax Act, a wealth tax aimed with various degrees of viciousness at those worth more than $50 million, which I saw as a neofeudalist move:

 

Under the “classic” feudalism introduced in England by the Normans after their hostile takeover in 1066, ownership of land and anything built upon it ultimately belonged to the crown. Movable property was a different matter. What was yours was essentially yours, if subject to levies at awkward moments. That probably means that Senator Elizabeth Warren thinks of William the Conqueror as having been a soft touch. Should her Ultra-Millionaire Tax Act pass (and be found to be constitutional), everything, however contingently, will become property of the state. . . .

 

I noted that “the progressive clamor for wealth taxes is growing louder and is reflected at both the state and federal levels as well as internationally.”

 

And so, right on schedule, California progressives have reportedly gotten the signatures they need for a vote on a “one-off” wealth tax on the assets of Californians worth more than $1 billion, a process that would include ascribing a valuation on voting interests in a company that exceeds a billionaire’s equity stake, a provision so stupidly destructive that it can only be understood by seeing wealth taxes for what they are: a weapon deployed by a progressive elite out to knock out potential competition.

 

As I argued:

 

The spite and the jealousy displayed by wealth tax activists toward the “rich” is no less genuine for being strategically useful. They, one part of the elite (or would-be elite), see what another part has, and they crave it for themselves. They are enraged at the thought that they have been left behind by people they see as money-grubbing moral inferiors. Their egalitarianism is a tool to create a system in which they and their acolytes take the spoils.

 

Meanwhile California’s billionaires are taking note.

 

The Wall Street Journal:

 

Billionaires are already leaving the state. California Tax Foundation visiting fellow Jared Walczak estimates in a new paper that “reported departures already total $777 billion,” and more “‘quiet departures’” that do not draw media coverage” are likely this year since “there are solid legal reasons to believe that the initiative’s residency date and approach could be challenged successfully in court.”

 

By his estimate, the wealth tax exodus could total $1.23 trillion and reduce annual state tax revenue by $3.53 billion to $4.49 billion, mainly from lower income-tax collections. He calculates that “the net present value of these ongoing losses outstrips the one-time revenue projected by the initiative’s proponents effects.” That means the tax will over time cost the state more revenue than it raises because of out-migration and slower economic growth.

 

Read on:

 

In addition, [Walczak] warns, “eroding existing tax bases could amplify the perceived ‘need’ for ongoing wealth taxation.” If voters approve the tax, expect progressives to push soon to extend it or reduce the wealth threshold at which it hits. That’s the history of income tax hikes. The referendum also lets the Legislature and Governor amend the tax, so Democrats won’t even need voter approval. [Emphasis added.]

 

Warren’s proposed tax is supposed to raise $6.2 trillion over a decade. The money is aimed not at debt reduction, but at funding new spending programs. But what if, as quite a few believe, it falls short of its revenue targets? If revenues disappoint, will spending be cut or will taxes be increased?

 

I added that that was a rhetorical question.