Will California's billionaire tax pay off? New studies sharply disagree

Ben Paviour, The Sacramento Bee on Mar 25, 2026

By clicking submit, I authorize Arcamax and its affiliates to: (1) use, sell, and share my information for marketing purposes, including cross-context behavioral advertising, as described in our Privacy Policy , (2) add to information that I provide with other information like interests inferred from web page views, or data lawfully obtained from data brokers, such as past purchase or location data, or publicly available data, (3) contact me or enable others to contact me by email or other means with offers for different types of goods and services, and (4) retain my information while I am engaging with marketing messages that I receive and for a reasonable amount of time thereafter. I understand I can opt out at any time through an email that I receive, or by clicking here

A one-time tax on California’s billionaires could bring the state a $100 billion windfall, staving off brutal cuts to healthcare services across the state caused by the 2025 Republican megabill.

Or it could result in a net loss in tax revenue as billionaires flee the state, endangering the state’s long-term fiscal health.

The high-stake scenarios are laid out in two dueling analyses of the proposed billionaire tax, a measure sponsored by Service Employees International Union–United Healthcare Workers West that’s currently gathering signatures to appear on the ballot this November. The initiative levies a 5% one-time tax on California billionaires, with 90% of the revenue going to fund health care services affected by the 2025 megabill.

Without action, backers of the initiative warn millions of Californians could lose health insurance and dozens of hospitals and ERs could close.

The initiative is controversial. Gov. Gavin Newsom and most of the candidates to succeed him oppose the measure; a UC Berkeley poll released last week found 52% of likely voters support it. Billionaires like Google co-founder Sergey Brin have poured tens of millions into efforts to stop the tax, and some, like Meta CEO Mark Zuckerberg, have reportedly bought new homes or moved assets to other states.

The latest findings are likely to add fuel to both sides of the debate.

The more optimistic study comes from a team of three tax attorneys and one economist from UC Berkeley, UC Davis and the University of Missouri who developed the structure of the tax proposal. They argue that because the tax applies to billionaires who were California residents as of Jan. 1, few will be able to outrun the tax. Their analysis also posits that most of the billionaires are likely to stick around in the long run because the tax is a one-time hit.

Another analysis, from a team at the right-leaning Hoover Institute, argues the tax’s backers overstate which billionaires are still California residents and how much of their holdings are actually subject to the tax. Using models developed from wealth taxes in Europe, they estimate the tax will generate $40 billion and drive many in the group out of the state in the longer-term, meaning the proposal will actually lose money for the state in the long run.

The wealth tax backers have attacked the Hoover Institute’s motives. David Gamage, a law professor at the University of Missouri who helped write the ballot measure, called the Hoover research a “bad faith analysis” in an interview. He argued the researchers assume perpetual billionaire departures even though the wealth tax is a one-time measure.

Will billionaires flee California for good?

Gamage argued the warnings of mass exodus following Massachusetts’ 2022 millionaires’ tax and Washington’s 2021 capital gains tax hadn’t been borne out.

“Both of those taxes raised more revenue than predicted,” Gamage said.

Benjamin Robert Jaros, an economist at the Hoover Institute, stood by the institution’s research on the California measure, arguing it was tightly modeled to existing research on the topic.

“Ultimately, what drives departures is not whether the tax is one-time on paper, but whether billionaires believe it will be levied again, and if it passes, they almost certainly will think so,” Jaros said in an email.

Gamage urged another academic — Jeff Hoopes, a professor at the University of North Carolina who specializes in how people respond to tax law — to review both studies. Hoopes’ paper, published last week, noted that the wealth tax backers used a more simple methodology for calculating tax revenue, while the Hoover Institute went more in the weeds.

In an interview, Hoopes, who described himself as a wealth tax skeptic, agreed with Jaros that the tax would encourage billionaires to leave.

He said one key variable was the legal questions surrounding what constituted residency, which could be an especially thorny question for jet-setting billionaires.

“It’s not like they’re going to start putting things in cardboard boxes, put them in their U-Haul and drive across the state line to Arizona,” Hoopes said. “These people have houses everywhere. And it’s a legal matter of documenting their association with California.”

_____