Billionaires' wealth hits $2.3 trillion

California billionaires held $2.3 trillion in net worth by mid-2026, a sum equal to the annual income reported on all state tax returns. Proposition 40, a measure on the November ballot, proposes a one-time 5% tax on the net worth of individuals who were state residents on January 1, 2026. The tax is retroactive and targets assets such as stocks, real estate, and personal property. Revenue is earmarked primarily to offset federal cuts to Medicaid for low-income residents.

Gabriel Zucman, a professor at UC Berkeley and the Paris School of Economics, co-authored an analysis estimating the measure will generate approximately $100 billion. Zucman, Jasper Boll, and Emmanuel Saez calculated this figure by taking 5% of the estimated $2.3 trillion wealth pool and reducing it by 10% to account for potential avoidance and evasion. Zucman argues the tax addresses a structural flaw where billionaires pay little in income tax due to low realized gains. He contends that if California implements the tax, it will trigger a U.S. and international movement to tax the superrich.

Joshua Rauh, a senior fellow at Stanford University and the Hoover Institution, presents a conflicting estimate. In an analysis co-authored with Benjamin Jaros, Rauh argues the tax will cost California $39 billion. Rauh asserts that at least seven billionaires, including Larry Page, Sergey Brin, Peter Thiel, Don Hankey, Steven Spielberg, Travis Kalanick, and David Sacks, changed their residency to other states before the January 1, 2026, cutoff. He claims these departures removed approximately $30 billion from the tax base.

Zucman disputes the claim that these individuals escaped the tax. He cites legal experts who argue that establishing non-residency requires more than a change of address. He points to Brin, who moved to Nevada but still commutes to Silicon Valley, as an example of a resident who may not have legally severed ties with California. Rauh maintains that these individuals successfully established residency elsewhere with the aid of top legal and accounting teams.

Rauh also cites constitutional risks. He argues that the tax's retroactive nature and its reach into wealth held outside California may violate due process protections. He predicts legal challenges could strike down portions of the measure. Zucman acknowledges that past wealth taxes in other countries have often failed due to loopholes, but he notes that Prop 40 taxes business holdings and uses a one-time, retroactive structure to prevent flight.

The wealthy have spent $333 million to oppose the measure, according to a report in The New York Times. The tax applies to assets including publicly traded stocks, which are easier to value than illiquid assets like art or private equity. Both economists agree the final outcome depends on how courts interpret the law and how many billionaires successfully change residency before the deadline.