Opinion | The Case for California’s Billionaire Wealth Tax

On taxes and much else, California has often led the country. In 1978 the state’s voters approved Proposition 13, which strongly limited tax increases. Prop 13 was the opening salvo in Ronald Reagan’s antitax revolution, which swept the United States two years later.

This year California’s voters could spearhead a shift in the opposite direction. A large labor union representing health care workers and advised by academic experts — including the two of us — got the 2026 Billionaire Tax Act on this November’s ballot. The proposed tax would be a one-time levy of 5 percent on billionaire wealth, spread over five years. If the measure passes, it would be the first tax targeted at the combined personal and business wealth of billionaires enacted anywhere in the world.

California is an ideal place to test this idea. The state needs money to fill a budget hole that the Trump administration created when it cut, among other things, Medicaid, a state-federal partnership that provides health coverage to low-income people. Without more state tax revenue to fill the loss in federal funding, the fraction of uninsured Californians will increase substantially, reversing part of the progress made since Obamacare.

The state is also home to many extremely wealthy people. On Monday we released a working paper that documents the explosive growth in the wealth of California billionaires.

The billionaire class in California includes roughly 250 households, a mere 0.001 percent of the state’s families. Yet its wealth now amounts to more than half of California’s entire annual economic output.

This means that if these billionaires spent all of their wealth, they could buy more than half of the goods and services produced in a year in the entire state.

This extraordinary wealth does not translate into extraordinary tax contributions.

From 2019 to 2025, California billionaires’ wealth grew an average of over 15 percent per year, while they paid, on average, just 0.26 percent of their wealth annually in state income taxes. Their income tax payments accounted for only 2.4 percent of California’s income tax revenue.

For the very richest individuals, the effective burden was even lower. The four wealthiest Californians — Mr. Brin, Mr. Huang, Mr. Page and Mr. Zuckerberg — paid an average of just 0.07 percent of their wealth annually in California income tax over that period, according to our analysis of Securities and Exchange Commission records on stock sales and executive compensation from their companies.

California’s tax system fails to effectively tax ultrahigh-net-worth individuals. The same is true of the United States’ tax system and those of other countries.

The problem is that billionaires’ fortunes are largely held in assets (mainly stocks) that rise in value over time. This rise in value is not taxed unless the assets are sold. Under current law, when billionaires don’t sell their stock, wealth accumulates while taxes on their gains are deferred indefinitely and sometimes avoided entirely.

Google’s founders, Mr. Brin and Mr. Page, are the state’s richest individuals, with more than $600 billion in wealth between the two of them — up from $345 billion last September. They have come out against the wealth tax initiative while making moves to leave the state. They benefit from the status quo. Mr. Brin has funded the political campaign against the measure and has funded signature collection for two competing ballot initiatives that could undercut the wealth tax, spending at least $57 million to fight it.

They stepped down from day-to-day management at the end of 2019. That year and in 2020 and 2023, each got from Alphabet, Google’s parent company, only $1 per year in executive compensation. They didn’t sell stock, and they didn’t receive dividends or any other compensation relating to Alphabet, so they paid no income tax on their wealth related to the company. But their stock wealth rose by $133 billion, driven in part by the reinvestment of their share of company profits, which amounted to $20 billion in those three years. Scenarios like this show why some of the very wealthiest people in America are among the least taxed.

This arrangement violates basic principles of fairness, deprives the government of revenue it needs for public services and fuels wealth concentration. Overwhelming wealth becomes power — power to influence the direction of corporate behemoths, power to sway society through donations and media ownership, power to steer politics through unlimited campaign contributions to super PACs. Elon Musk’s recent adventures in the executive branch, after spending hundreds of millions of dollars to help elect Donald Trump, demonstrate how quickly concentrated wealth can transmute into political control.

We don’t imagine that a one-time 5 percent tax on the wealth of California billionaires, as proposed in the 2026 Billionaire Tax Act, would fix all these problems. But it could raise nearly $100 billion in revenue for California. This amount would make up for the funding the federal government is taking away from the state over the next five years. It would also be tiny relative to billionaires’ recent wealth gains. In the past three years alone, the total wealth of California’s billionaires grew by a staggering 144 percent, to over $2 trillion.

Taking such a small bite out of billionaires’ exponentially growing tech wealth wouldn’t doom Silicon Valley because the value of California’s concentrated tech talent dwarfs the proposed wealth tax. Nvidia’s chief executive, Mr. Huang, who would be one of the biggest payers of the tax, said he would be “perfectly fine” with it.

Other myths about the proposal need to be dispelled. It would tax only billionaires. It has been carefully written to respect the California and U.S. Constitutions. It contains provisions designed to prevent taxation beyond 5 percent of the fair market value of anyone’s shares and to avoid hitting start-ups hard. Billionaire entrepreneurs, with sizable illiquid stakes in newly founded private companies, would be able to defer payments until they began to cash out.

It is too late for superrich Californians to flee the state to avoid the tax. If approved in November, the tax would apply to billionaires who were residents of California as of Jan. 1, 2026. Some affected taxpayers might have left between the ballot initiative’s introduction, in late October 2025, and the end of the year. But it is improbable that any significant number of billionaires fully cut ties with California in that short period.

Critics of the ballot measure have voiced concerns that even a small number of billionaires leaving the state would lead to lower state tax revenues overall. Their math doesn’t add up. California’s billionaires currently pay such a low tax rate that even if all of them left the state, it would take 25 years for the loss of their tax payments under the current set of rules to surpass the amount the state would raise if the one-time tax succeeds this fall.

While billionaires who no longer run their businesses day to day may choose to eventually leave California, uprooting an established business that relies on the pool of California’s tech talent and tech ecosystem would be much harder: While Mr. Page and Mr. Brin may leave for Florida or Nevada, there are no discussions of Google leaving Mountain View.

California’s tech sector produces billionaires faster than any other state’s. Its superrich — who have benefited from the state’s infrastructure, universities and networks of people and businesses — have accumulated enormous fortunes almost tax-free. The proposed billionaire tax would finally make them contribute in modest proportion to their gains. In November, California’s voters should show the nation the way forward.