Stanford economists estimate California Prop 40 would raise $30 billion

Stanford economists estimate California's Proposition 40 would raise about $30 billion, less than a third of the $100 billion backers project. Voters decide the measure on November 3.

The measure would impose a one-time 5% levy on the net worth of California residents worth $1 billion or more. In a National Bureau of Economic Research working paper, Benjamin Jaros and Joshua Rauh attribute the lower estimate to departures: seven billionaires have publicly left the state, including Peter Thiel and Google co-founders Larry Page and Sergey Brin, taking roughly $540 billion, or 30% of California's billionaire wealth, with them. The authors believe others have moved quietly.

The tax applies to anyone who was a California resident on January 1, 2026, so a move now may not avoid it. The Franchise Tax Board would also test whether a departure was genuine. The measure's valuation and constitutional questions remain unresolved, as this publication reported in September.

The authors project a smaller billionaire population could cost the state $1 billion to $3.5 billion a year in income tax collections. If those losses persist, their present value would exceed the wealth tax proceeds by about $39 billion. California's nonpartisan Legislative Analyst's Office expects a temporary gain of tens of billions, partly offset by a possible ongoing decline of less than $1 billion a year.

The measure's sponsor, SEIU-United Healthcare Workers West, rejected the findings. Vice president Debru Carthan told CBS News the proposition's "sole purpose is to ensure that billionaires finally pay their fair share to prevent a collapse of California's healthcare system." "These findings suggest that the Billionaire Tax Act will not fulfill the primary functions for which it was designed," Jaros and Rauh wrote. Rep. Ro Khanna, a California Democrat, argued in a Guardian op-ed that the tax would raise about $100 billion, with 90% going to healthcare.