Two economists clash over California's Prop 40 billionaire tax: $100 billion gain or $39 billion loss

California voters decide Tuesday on Proposition 40, which would create what NPR calls America's first wealth tax aimed at billionaires. Two economists who studied it have reached very different answers about what it would do for the state's budget ¹.

The measure is a one-time, 5% tax on the net worth of billionaires, with some assets exempted. It would apply to anyone who was a California resident on Jan. 1, 2026, and the money would go mostly to health care for low-income Californians, to help offset federal Medicaid cuts. Medicaid is the government health program for people with low incomes ¹.

The case for: about $100 billion

NPR reports that an analysis by Gabriel Zucman, a UC Berkeley economist, with Jasper Boll and Emmanuel Saez puts California billionaires' wealth at $2.3 trillion by mid-2026 and estimates the tax could raise "about $100 billion" ¹.

They reached that number by taking 5% of $2.3 trillion, then cutting the total by 10% for avoidance, evasion and billionaires who left before the cutoff ¹. Zucman argues the one-time design removes the reason to move. As he told the San Francisco Standard, a billionaire cannot avoid the tax by moving ².

From Channel GOPOssoff: Medicaid cuts mean an hour's drive in laborSenator Jon Ossoff · 1.3K plays · captioned, with the source named

There is no incentive to move to another state. One cannot avoid the tax by moving.

The case against: a $39 billion loss

Joshua Rauh, a Stanford economist and Hoover Institution senior fellow, wrote a competing analysis with Benjamin Jaros. They say billionaires would leave and take their income tax payments with them ¹. Rauh's estimate is that the measure would cost the state $39 billion ¹.

Their paper estimates the tax would raise about $30 billion up front, within a range of $28 billion to $36 billion. They say lost state income tax revenue from departing billionaires would more than offset that, for an average net loss of about $39 billion in today's dollars ².

We calculate that Proposition 40 would cost the state of California $39 billion.

Rauh says at least seven well-known billionaires had already left California before the Jan. 1 cutoff, cutting potential revenue by "around $30 billion" ¹. Zucman disputes that. He says legal experts he trusts think it is unlikely any of them successfully ended California tax residency in time ¹.

What happens next

Voters settle the question Tuesday, Nov. 3 ². The California Legislative Analyst's Office, the Legislature's nonpartisan budget adviser, says the measure would bring in "tens of billions" of dollars but gives no net figure ².

Wealthy opponents are spending heavily. NPR, citing The New York Times, reports the superrich have put $333 million into a group trying to defeat the measure ¹.

That matters beyond California. Zucman says a yes vote could start a national movement toward a federal wealth tax ¹. The two sides disagree less about arithmetic than about assumptions: how many billionaires have really left, and whether a one-time tax can be scored on its own or must be weighed against lasting income tax losses ¹².

Both estimates are projections. Neither has been tested, and Rauh's analysis also considers the chance that courts strike down parts of the tax ².

The Record

1. Jan 1, 2026Residency cutoff: billionaires living in California on this date would owe Prop 40's one-time 5% tax ¹.
2. Sep 17, 2026Jaros and Rauh presented their updated paper at an NBER conference ².
3. Nov 3, 2026California voters decide Proposition 40 on Election Day ².

Free to reprint Republish this story on your site or in your newsletter

Any site, blog or newsletter may run this story free of charge. Keep the credit line and its link to the original, do not sell it, and edit only for length or house style (the full terms). Photos carry their own licenses, noted under each photo on this page, so use the text alone unless a credit says otherwise.

<h2>Two economists clash over California&#39;s Prop 40 billionaire tax: $100 billion gain or $39 billion loss</h2> <p><em>By The GOP Files Kitchen-Table Desk. This article first appeared on <a href="https://thegopfiles.com/story/two-economists-clash-over-california-s-prop-40-billionaire-tax-100-billion-gain">The GOP Files</a> on Monday, November 2, 2026.</em></p> <p>California voters decide Tuesday on Proposition 40, which would create what NPR calls America&#39;s first wealth tax aimed at billionaires. Two economists who studied it have reached very different answers about what it would do for the state&#39;s budget .</p> <p>The measure is a one-time, 5% tax on the net worth of billionaires, with some assets exempted. It would apply to anyone who was a California resident on Jan. 1, 2026, and the money would go mostly to health care for low-income Californians, to help offset federal Medicaid cuts. Medicaid is the government health program for people with low incomes .</p> <h2>The case for: about $100 billion</h2> <p>NPR reports that an analysis by Gabriel Zucman, a UC Berkeley economist, with Jasper Boll and Emmanuel Saez puts California billionaires&#39; wealth at $2.3 trillion by mid-2026 and estimates the tax could raise &quot;about $100 billion&quot; .</p> <p>They reached that number by taking 5% of $2.3 trillion, then cutting the total by 10% for avoidance, evasion and billionaires who left before the cutoff . Zucman argues the one-time design removes the reason to move. As he told the San Francisco Standard, a billionaire cannot avoid the tax by moving .</p> <blockquote><p>There is no incentive to move to another state. One cannot avoid the tax by moving.</p><p>&mdash; Gabriel Zucman, Economist, University of California, Berkeley</p></blockquote> <h2>The case against: a $39 billion loss</h2> <p>Joshua Rauh, a Stanford economist and Hoover Institution senior fellow, wrote a competing analysis with Benjamin Jaros. They say billionaires would leave and take their income tax payments with them . Rauh&#39;s estimate is that the measure would cost the state $39 billion .</p> <p>Their paper estimates the tax would raise about $30 billion up front, within a range of $28 billion to $36 billion. They say lost state income tax revenue from departing billionaires would more than offset that, for an average net loss of about $39 billion in today&#39;s dollars .</p> <blockquote><p>We calculate that Proposition 40 would cost the state of California $39 billion.</p><p>&mdash; Joshua Rauh, Stanford economist and Hoover Institution senior fellow</p></blockquote> <p>Rauh says at least seven well-known billionaires had already left California before the Jan. 1 cutoff, cutting potential revenue by &quot;around $30 billion&quot; . Zucman disputes that. He says legal experts he trusts think it is unlikely any of them successfully ended California tax residency in time .</p> <h2>What happens next</h2> <p>Voters settle the question Tuesday, Nov. 3 . The California Legislative Analyst&#39;s Office, the Legislature&#39;s nonpartisan budget adviser, says the measure would bring in &quot;tens of billions&quot; of dollars but gives no net figure .</p> <p>Wealthy opponents are spending heavily. NPR, citing The New York Times, reports the superrich have put $333 million into a group trying to defeat the measure .</p> <p>That matters beyond California. Zucman says a yes vote could start a national movement toward a federal wealth tax . The two sides disagree less about arithmetic than about assumptions: how many billionaires have really left, and whether a one-time tax can be scored on its own or must be weighed against lasting income tax losses .</p> <p>Both estimates are projections. Neither has been tested, and Rauh&#39;s analysis also considers the chance that courts strike down parts of the tax .</p> <p><em>Read the original, with every source linked, at <a href="https://thegopfiles.com/story/two-economists-clash-over-california-s-prop-40-billionaire-tax-100-billion-gain">thegopfiles.com</a>. Republished under The GOP Files' <a href="https://thegopfiles.com/republish">free republishing terms</a>.</em></p> <img src="https://thegopfiles.com/api/rp/two-economists-clash-over-california-s-prop-40-billionaire-tax-100-billion-gain.gif" alt="" width="1" height="1" style="border:0;width:1px;height:1px">

Copy the HTML Paste it into your editor's HTML view. The one-pixel image at the end tells our newsroom the story ran; it stores no reader data.

Sources

1. NPR, “Two economists studied California's billionaire tax. They reached wildly different conclusions” (2026-11-02). npr.org/sections/planet-money/2026/11/02/g-s1-151009/two-eco
2. The San Francisco Standard, “Hoover economist Ben Jaros Prop 40 billionaire tax study” (2026-10-26). sfstandard.com/2026/10/26/hoover-economist-ben-jaros-prop-40

Found an error? Tell the newsroom. Corrections are noted at the top of the story.