[Hello Liberty Lensers. This is the text I used for my opening remarks at the debate. Watch it here. Detailed calculations on revenues are in our prior post. More to come.]
This proposal is sophisticated. Emmanuel designed it with the intent of circumventing all of the classic problems with wealth taxes. We all know that Emmanuel is a brilliant economic theorist. And in theory he thought of everything.
In reality though, the proposal has not survived first contact with actual billionaires.
I’m going to make three points.
First, the revenue estimates that the proponents of this Billionaire Tax Act put forward have already proven far too optimistic based on actions that targeted individuals have already taken.
Second, on addressing inequality. This act is very unlikely to reduce inequality. In fact, what it’s likely to do is cause large economic damage that is likely to make inequality worse.
Third, if the state of California has a fiscal emergency, it’s a spending problem, not a revenue problem. It has little or nothing to do with OBBBA.
1. The Act will LOSE $25B, not raise $100B
Emmanuel claims this tax would raise $100 billion. How did he arrive at that number? He and his team started out as he explained with the California Forbes billionaires. That wealth base, with a 5% tax, would generate $109 billion in tax. He then reduced those expected revenues by 10%, which is a fairly small response parameter, on the grounds that various mechanisms that he had built into the proposal would prevent avoidance or evasion.
Our team went through all of the billionaires, person by person, and we discovered some interesting things.
To start, we found that one person who they included was Larry Ellison. Ellison left California in 2020. This was headline news. He moved to Hawaii. He’s now living in Florida. This departure alone knocks $12 billion off Emmanuel’s expected revenues.
I imagine Emmanuel is going to say, no, we have some reason to claim that he’s still a California resident. I think that’s going to be a very difficult claim.
We then went through all the rest of the California billionaires. We found that SIX of the billionaires, including the TOP TWO, Google co-founders Larry Page and Sergey Brin, left California between the time that this proposal was announced and December 31, 2025.
If you put them together with Ellison, the best case scenario now is that you’re down to around $67 billion.
So you’d be down almost 40% on the wealth tax base, not 10%.
And those are only the people who made the headlines.
To estimate the quiet moves, we apply parameters from the academic literature on wealth-tax migration, including by MIT’s Jonathan Gruber, someone Emmanuel and I have each (separately) done research with.
Based on those additional departures, the expected revenue falls to around $40 billion, so you’re down 60%, not 10%.
But there’s another problem: California’s billionaires currently pay $3-$6 billion per year in income taxes. If some leave, that revenue disappears.
Once you account for the net present value of those lost income taxes, the net result for California revenues is negative 25 billion dollars. That’s our score of this measure.
That is, the net present value of the lost income taxes wipes out more than the entirety of the gains from the wealth tax.
Now, to be clear, this does assume that Ellison, Page, and Brin actually did manage to leave in time. They represent about half of the entire wealth base of this tax. Emmanuel’s plan is a bet that those named individuals (plus Zuckerberg, who left a little late in February 2026) didn’t get out on time.
He’s relying on kind of two main arguments: (i) a retroactive residency clause, which WILL be contested in the courts, and (ii) the state’s tax rules that he hopes might invalidate the 2025 moves because they didn’t fully establish “closest economic ties” in the other state in time.
For example, if their doctors, clubs, or religious memberships are still in California—or if they leave their pets in California—they could still be caught in Emmanuel’s dragnet.
Even if California prevails in court on some aspects, it will be after years of litigation. These actions will have permanently imposed real costs on employment, investment, innovation, and there’s not going to be any clawing back of that.
2. Exporting Billionaires and Jobs, not Addressing Inequality
Emmanuel is clearly motivated to address inequality and wealth concentration.
And perhaps even some of you are thinking, who cares if it doesn’t raise revenue… if it addresses inequality that’s good enough. You may think, “If inequality is bad for society, then we should actually be willing to pay something to reduce it.”
But if the wealthiest simply leave, you haven’t reduced inequality. You’ve just exported it.
They’re still billionaires. They’re just billionaires in Texas or Florida.
And when founders leave, the innovation economy—and the jobs it creates—often leave with them, making the economy worse for everyone.
So this policy doesn’t address inequality. It just relocates both wealth and opportunity somewhere else, making what is left worse for everybody else.
What about all the people who would be employed by the companies of the billionaires? Not just by the current billionaires, but by others who think their companies might succeed enough to make them a billionaire someday and worry that this experiment might repeated again, right?
There is at least one person on the Forbes list who is encouraging those who have just raised a Series B to leave now before it’s too late. So it’s about those investors as well.
3. California has a Spending Crisis, not a Revenue Crisis
For years, the California Department of Finance and the LAO have warned about persistent structural deficits. The LAO is the non-partisan budgetary analysis agency of the state, California’s analogue to the Congressional Budget Office.
And this is not a revenue problem. Since 2019, revenues in California are up by 55%. But spending is up by 68%. So it’s hard for me to look at that and say, “California faces a major revenue problem.”
And as a result of these trends right now, California faces a $93 billion structural deficit over the next four years, having nothing to do with OBBBA, or the federal government, or Donald Trump.
Furthermore, according to the LAO, federal Medicaid changes from OBBBA only increased Medi-Cal costs by $3 billion, not by $19 billion.
And since this tax is earmarked to a special fund, the state will still have the $93 billion structural deficit, even if the wealth tax passes and manages to collect a few billion dollars.
So this tax is not a solution to California’s financial problems.
Do You Really Believe It’s A One-Time Tax?
Just one final point. This tax is billed as one-time. But why would anybody believe that it’s a one-time tax?
The measure has to write an authorization into the California Constitution to lift the cap on taxation of intangible personal property. It’s written in a way that’s specific to this measure.
But once that legal infrastructure is in place, future wealth taxes can be built on top of it.
At any rate. At any threshold. At any time.
The important point is that California’s high net worth residents understand this. That’s why they’re leaving.
And it’s why prospective future billionaires are likely looking elsewhere to start their businesses.
It’s a classic case of killing the goose that lays the golden eggs.
In sum, this measure raises much less tax than advertised if it on net raises anything at all. It does nothing to address inequality. It creates constitutional infrastructure for more wealth taxes. And it’s driving out taxpayers that the state’s government and its whole economy depends upon.