In California, the Damage of the ‘Billionaire Tax’ Has Already Been Done

By Charles C. W. Cooke

Thursday, June 18, 2026

 

“A proposal to tax the wealth of billionaires in California,” the New York Times reports, “has officially gathered enough signatures to appear on the November ballot.” And yet: “It isn’t yet certain that the tax initiative will actually be voted on.” Why? Because “several prominent Californians, including Gov. Gavin Newsom, have vowed to defeat the measure, and they could strike a last-minute deal to remove it from voter consideration.”

 

Yeah, maybe. But, at this point, who cares? This one is already over. Maybe the referendum will pass. Maybe it’ll be struck from the ballot. Maybe it’ll be nixed in exchange for some other venal priority of the SEIU. Maybe half of the state’s voters will be abducted by extraterrestrials. It doesn’t especially matter. At this stage, there remains no outcome that isn’t bad for California and for the Democrats that run it. The damage has been done.

 

Merely by talking about a wealth tax, California prompted an exodus. Prophylactically, a series of entrepreneurs, worth between $700 billion and $1 trillion, summarily left the state. What happens next remains to be seen, but none of it is salutary. Back of the envelope, the options appear to me to be as follows:

 

1.      The measure is removed from the ballot at the behest of Gavin Newsom—who, in his characteristically egotistical way, has said, “I’ll do what I have to do to protect the state”—and an internecine fight breaks out within the Democratic Party, which further emboldens the anti-establishment wing that has recent brought us such luminaries as Zohran Mamdani, Graham Platner, and Alexandria Ocasio-Cortez.

 

2.      The measure is removed from the ballot as part of a grand bargain that further solidifies union control of California, and thereby guarantees that the state is treated to even more of the anti-growth policies that have been bleeding the state dry for decades.

 

3.      The tax remains on the ballot and passes, at which point those who have already fled will be joined by a good number of others who will now be leaving to avoid a real, rather than a theoretical, confiscation of their assets. In all likelihood, those people will go to Austin, Texas, or to Miami, Florida, or perhaps even to New York City.

 

4.      The tax remains on the ballot but doesn’t pass, at which point the institutional Left in California will have to acknowledge that it chased out up to a trillion dollars of wealth — and the existing activity and tax revenues that it generates — in pursuit of an idea that was so unpopular that it was rejected by one of the most progressive electorates in the nation.

 

Pick your outcome. It doesn’t matter. In every scenario, California gets hosed.

 

Why has this happened? There are many reasons, but one of them is that the state’s residents have become all too comfortable having it both ways. Californians want to rely upon the rich to pay almost all of the taxes in the state and to vilify those rich people and to suggest that they shouldn’t exist. By design, California’s budget is heavily reliant upon the wealthy. This is why California collects far more revenue than usual during tech booms and periods of impressive market gains, while during busts and downturns it faces drastic budget deficits. Under the current system, the top one percent of Californians pay around half of all personal income taxes in the state, while the top five percent pay around 70 percent. And unlike in the federal tax code, capital gains are treated as ordinary income in California, which means that when a founder sells his company or an investor realizes his gains, he is taxed at the full rate. The Democrats who run the state insist that this is “fair,” which is their prerogative. But when combined with their open hostility toward those who are paying the bills, it is unsustainable.

 

A few years ago, the head of the California Federation of Labor Unions, Lorena Gonzalez Fletcher, tweeted “F*ck Elon Musk.” In response, Musk wrote “Message received” and relocated Tesla to Texas. While less profane, the “billionaire tax” has sent the same message, and, whatever its fate, it is now guaranteed to have had the same results.