Wayne Winegarden, an economist at the Pacific Research Institute, said the measure’s failure could end further wealth tax-related departures, although California could continue to lose residents as its competitive advantage erodes.
California voters rejected a proposed one-time 5% tax on billionaires’ wealth, rejecting a measure that supporters say could raise tens of billions of dollars for health care. The tax would have applied to people who resided in California on January 1, 2026, with payments spread out over five years.
The defeat came as some of the state’s wealthiest residents warned they could leave California over the proposal. The state has one of the nation’s largest billionaire populations and relies heavily on high earners to fund its budget, making the potential loss of additional wealthy residents a concern for state finances.
Supporters, including Sen. Bernie Sanders, I-Vt., and the Service Employees International Union – United Healthcare Workers West, said the tax could help offset the Trump administration’s cuts to health care and food aid. California Governor Gavin Newsom opposed the tax, arguing that California should address wealth inequality without driving billionaires out of the state.
CALIFORNIA BLEEDING TAX PROPOSAL 1,000 BILLIONAIRES FLEE
Sen. Bernie Sanders, I-Vt., supported California’s proposed billionaires tax, saying it could help fund health care and food assistance. (Jason Henry/Bloomberg via Getty Images)
Voters were also weighing Proposition 42, a separate measure backed by tech billionaires to block new taxes on personal property. He was in the lead, and his endorsement could make future efforts to tax billionaires’ wealth more difficult, although his supporters have vowed to keep pushing.
Wayne Winegarden, a senior fellow in business and economics at the Pacific Research Institute, said concerns that the tax could extend beyond billionaires and drive away wealthy residents may have hurt his support.
“A lot of messages were about, ‘You’re next.’ And I think that message resonated with people. This is probably not a one-time tax. It’s not going to be limited to billionaires,” he said.
CEO SAYS DOING BUSINESS IN THE STATE “SUCKS” AS COMPANY HEADS TO TEXAS AMID CALIFORNIA EXODUS
California voters have rejected a proposed one-time tax on billionaires’ wealth, amid debate over whether the measure could drive out the state’s wealthy residents. (Kyle Grillot/Bloomberg via Getty Images)
Winegarden said voters may also be concerned that billionaires’ departure will leave less money in the state budget.
“People were worried about losing money because the billionaires were leaving. The macroeconomic impacts of the wealth tax meant that the rest of the budget was going to have less money. I think that message got out, and I think it helped,” he said.
Winegarden said removing the tax could put an end to departures linked to the proposal, but he argued that California remains uncompetitive on taxes.
“Without the wealth tax, the continued hemorrhaging from a wealth tax perspective should stop. Today, from a tax competitiveness perspective, California is very uncompetitive.”
RED STATES SPENT DECADES DOMINATING A KEY CORNER OF THE ECONOMY
His comments speak to broader concerns that California’s tax policy could push wealth and investment elsewhere. The state is already losing taxpayers to other states.
Los Angeles County, home to Hollywood and one of the nation’s biggest economic engines, leads the nation in taxpayer losses. A net number of 17,496 tax filers left for other states, taking with them nearly $1.9 billion in income.
The exodus has spread beyond Los Angeles.
CLICK HERE TO GET FOX BUSINESS ON THE GO
Orange County had a net loss of 11,618 filers, followed by San Diego County with 9,401, Riverside County with 8,968 and San Bernardino County with 8,462.
The vote ended the latest push for a tax on billionaires, but it failed to quell the broader debate over California’s ability to keep its wealth and investments at home.
Gn usa
