Wealth Taxation

Wealth Tax Primer [SSRN Working Paper]

Abstract: This primer examines the administrative, empirical, and economic case against wealth taxation at the state and national levels. Wealth taxes emerged in earlier fiscal systems where tangible, immobile assets were the most feasible tax base. As financial markets expanded and capital became more mobile, advanced economies shifted toward income and consumption taxes, and most countries that experimented with modern wealth taxes ultimately repealed them after encountering administrative complexity, capital flight, and limited revenues.

Drawing on historical and empirical evidence, we document that wealth tax revenue estimates lack credibility because these estimates rely on untested assumptions about asset valuation and taxpayer behavior. High-income and high-net-worth taxpayers are particularly responsive to wealth taxation, so subsequent adoption of wealth taxes by jurisdictions lead to the erosion of the wealth tax and other tax bases, in addition to political pressure to expand the scope of the tax over time. Wealth taxes also distort incentives to save, invest, and build businesses, with implications for long-term capital formation and economic growth for the adopting jurisdictions.

Finally, we review the intellectual foundations of contemporary wealth tax advocacy and conclude that renewed interest in wealth tax proposals reflects political pressure rather than new evidence of effectiveness.

The Net Present Value of the Billionaire Tax Act: An Assessment of the Fiscal Effects of California's Proposed Wealth Tax [SSRN Working Paper]

Abstract: This report examines the revenue and migration impact of the 2026 California Billionaire Tax Act, a one-time 5 percent tax on the worldwide net worth of individuals exceeding $1 billion. Using data from the 2025 Forbes Billionaire List, news reports detailing the residential real estate holdings of California billionaires, and public announcements of billionaire departures from the state, we estimate the behavioral response and associated revenue loss to this new tax using several different methodologies. Even before accounting for reductions in other tax bases such as the income tax, we estimate that the Act will collect approximately $40 billion, less than half of the $100 billion projected by proponents. This range accounts for the publicly confirmed taxpayer migration that have already eliminated nearly 30% of the Act's wealth tax base and uses the wealth tax base elasticity literature to predict the additional tax base losses attributable to unannounced, stealth departures. We estimate that California's billionaires contribute $3.3-5.8 billion annually in state income taxes. The present value of permanently lost income tax collections from departures more than fully offsets the one-time wealth tax revenue, yielding a net present value of negative $24.7 billion. Across 100,000 simulated revenue and discount rate combinations, 71% of plausible outcomes produce a negative net present value of state revenues. Finally, we note that policies that distort behavior but generate little or no net revenue gain are not harmless as they may nonetheless impose substantial costs on residents through reduced employment, investment, and income.

Taxing the Same Few Households Won't Reduce California's Risk [Liberty Lens - An Economics Substack]

Carol Ryan warns that the U.S. economy is “increasingly dependent on a narrow group of very rich households” and that this concentration poses a risk in a downturn (”Billionaires’ Low Taxes Are Becoming a Problem for the Economy,” Feb. 18). She is correct to identify this dependence as a risk. But she never reckons with the logical implication of her own thesis...

The Fiscal Losses from California's Billionaire Tax Act [Liberty Lens - An Economics Substack]

This past fall, a coalition of labor unions filed the 2026 Billionaire Tax Act (“the Act”) with the California Attorney General. The ballot initiative would impose a “one-time” 5 percent tax on the worldwide net worth of individuals with assets exceeding $1 billion. In a report proponents of the Act estimated revenues of $100 billion. That figure begins with the $2.19 trillion aggregate net worth of California's billionaires, applies the 5 percent rate to arrive at $109.5 billion, then assumes that avoidance and evasion will reduce collections by just 10 percent. We decided to do calculations of our own, and we found much different results...

First Contact With Reality: The California Billionaire Tax [Liberty Lens - An Economics Substack]

My opening remarks at Stanford in the recent debate with California Billionaire Tax architect and UC Berkeley Professor Emmanuel Saez...

The ‘billionaire tax’ is a nightmare for California’s finances — and that’s only the beginning [New York Post]

California’s proposed “billionaire tax” will collect less than half of what is promised — with a net fiscal effect that will leave the state in worse shape. The state is attempting a crazy fiscal experiment: seeing how much revenue it can raise by aiming a large tax at a small group of people who are superbly well-equipped to move themselves — and their money — somewhere else. The result isn’t likely to be positive — in the literal sense of the word — for the mad fiscal scientists pushing the idea...

California Wealth Tax [SIEPR Economic Summit 2026]

Hoover Institution Senior Fellow Joshua Rauh and UC Berkley Professor Emmanuel Saez debate the proposed California Billionaire Tax Act. Debate moderated by the Wall Street Journal tax policy reporter Richard Rubin.

Page last updated March 17, 2026.