A new study by Hoover Institution scholars Ben Jaros and Joshua Rauh published by the prestigious National Bureau of Economic Research finds that the initiative on the ballot in California to institute a wealth tax will continue to chase wealthy people out of the state.
The California Billionaire Tax Act would impose a “one-time” 5 percent tax on the worldwide net worth of Golden State residents with incomes exceeding $1 billion.
The tax’s proponents claim it will raise $100 billion. But already at least seven billionaires have left the state to avoid the tax. Given more departures expected and the likely success of legal challenges to the tax’s retroactivity, the amount collected falls to closer to $30 billion.
But the billionaires who leave aren’t coming back, the $30 billion raised is offset by “the present value of permanently lost income tax collections from departures.” That revenue loss is likely to reach $39 billion, or $9 billion more than the tax revenues gained.
The study concludes that there is “an 85 percent chance of negative net present value of state revenues from the tax.”
So in other words, if this tax passes, Californians will be increasing the tax burden on everyone BUT billionaires. Hooray for soak the rich.
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