California’s proposed billionaire tax could generate far less revenue than supporters project and may ultimately leave the state nearly $39 billion worse off, according to a new analysis by two economists affiliated with Stanford University’s Hoover Institution. The warning comes as voters prepare to decide on Proposition 40 in the 3 November election, according to a report by Fortune. The ballot measure would impose a one-time 5% tax on the net worth of California residents who were billionaires as of 1 January 2026, with supporters claiming it could raise about $100 billion for the state, around 90% of which would be directed toward healthcare spending.
The study analysed Forbes billionaire rankings, real estate records and public relocation announcements to conclude that billionaire departures have already reduced the potential tax base by nearly 30%. Together, seven billionaires who have announced relocations account for an estimated $540 billion in wealth, according to the study. Using Forbes rankings, real estate reports and public relocation announcements, they estimate that departures have already eliminated nearly 30 percent of the proposed tax base. CBS News, citing the study, reported that seven billionaires who have publicly moved out of California account for about $540 billion in wealth, including Peter Thiel and Google co-founders Larry Page and Sergey Brin. The new figure is a sharper downgrade than the authors’ earlier Hoover analysis, which projected about $40 billion in revenue and a $25 billion net loss. Technology billionaires have contributed more than $340 million to oppose the measure and support competing ballot initiatives, according to campaign finance disclosures cited by reports. Sergey Brin alone has reportedly donated more than $100 million, while other donors include former Google chief executive Eric Schmidt, Palantir co-founder Peter Thiel, Stripe chief executive Patrick Collison and DoorDash CEO Tony Xu. Opponents have spent at least $21.2 million during the first 19 days of September, according to the report.
A major reason for the lower estimate is the migration of wealthy residents out of California, according to the researchers. The economists pointed to several high-profile billionaires who have publicly moved from California, including Peter Thiel and Google co-founders Larry Page and Sergey Brin. The economists’ main explanation is that billionaires can leave. The estimate also discounts the remaining base for the risk that courts strike the tax down. The proposal has triggered one of California’s most expensive ballot fights.