From Vox · Miles Bryan · · 2m
California wants a one-time tax on 250 billionaires
A ballot measure would take 5 percent of every California billionaire's assets, and even sympathetic experts think it's the wrong tool.
In brief
A ballot measure would take 5 percent of every California billionaire's assets, and even sympathetic experts think it's the wrong tool. The real loophole is that fortunes built on unsold stock go untaxed forever, and a one-time levy does nothing to close it. Originally reported by Vox.
Every Democrat's new applause line
Mamdani in New York, Talarico in Texas, Ossoff in Georgia. Taxing the rich is the one thing the party agrees on right now.
Only California put it on a ballot
This November, voters decide whether to charge the state's roughly 250 billionaires a one-time tax equal to 5 percent of their total assets.
Unions for, moderates wary
Labor unions, Bernie Sanders and Ro Khanna back the measure. Moderate Democrats are cooler on it, and several billionaires have already left the state.
A skeptic who wants the tax
Cornell sociologist Cristobal Young supports taxing billionaires and still thinks this version is wrong. He wrote the book on whether rich people flee taxes.
“It's a one-time tax, but this is not a one-time problem.”
The loophole under everything
Wage earners pay tax on every paycheck. Stock that climbs in value triggers nothing until it's sold, so fortunes compound almost untaxed.
“People are accumulating vast fortunes essentially without paying any tax on it at all.”
Millionaires don't actually flee
Young tracked where millionaires lived before and after state tax hikes. States raised real revenue, and migration barely moved.
“I found between no to very little tax migration in response.”
But this one is different
Past millionaire taxes were modest. Here a handful of people would owe bills of 10, 12, even 13 billion dollars, a scale nobody has tested.
“This tax proposal is a completely different tax instrument.”
Buy, borrow, never sell
Billionaires fund their lives by borrowing against their shares. Loans aren't income under the tax code, so the cash arrives tax free.
“It's not like these folks are living in a monastery somewhere.”
Tax the gain, not the pile
The federal Billionaires Income Tax Act targets yearly growth instead. Go from 200 billion to 220 billion and you owe on the 20, not the 220.
Wealth tax becomes income tax
Reframing annual gains as income sidesteps the constitutional and practical fights over taxing a total fortune, and it keeps working year after year.
“Increases in billionaire fortunes should be treated and taxed as income.”
Flawed, but worth having
Young's verdict: the California measure is a Band-Aid on a permanent problem. It's still forcing the argument the tax code has avoided for decades.
“This is a conversation we need to be having.”
The takeaway
The real loophole is that fortunes built on unsold stock go untaxed forever, and a one-time levy does nothing to close it.
