Economists Back California Billionaire Wealth Tax as Potential Model for Other Jurisdictions
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A group of Nobel-winning economists endorsed Proposition 40, a one-time 5% wealth tax on California residents with assets over $1 billion, arguing it could generate $100 billion and inspire similar measures elsewhere.
A letter signed by economists including Daron Acemoglu, Abhijit Banerjee, Peter Diamond, Esther Duflo, Paul Krugman and Joseph Stiglitz supports Proposition 40, which would impose a one-time tax of 5% on the assets of California residents whose net worth exceeds $1 billion. The signatories note that the state’s 250 billionaires hold roughly $2.3 trillion in wealth, yet state income taxes have captured only about 1.6% of the $1.4 trillion wealth increase projected for 2019-2025.
“California is the right place to take this historic step,” the economists wrote, adding that the concentration of billionaires has made the state one of the most unequal in the United States.
Proponents, including the Service Employees International Union-United Healthcare Workers West, estimate the levy could raise about $100 billion, helping to offset anticipated federal reductions in health-care spending. Supporters also argue that the tax would not jeopardize Silicon Valley’s position, citing that the region has attracted roughly 80% of new venture-capital funding in the United States since early 2026.
Opponents warn the tax could hinder economic growth and force founders to sell large portions of their companies. Governor Gavin Newsom opposes the measure, while Representative Ro Khanna backs it but cautions against taxing illiquid stakes or voting shares. Some unions share the governor’s concerns, and tech figures such as Nvidia CEO Jensen Huang say they are “perfectly fine” with the tax, whereas Google co-founder Sergey Brin has contributed more than $100 million to opposition efforts.
The economists contend that if California adopts the tax, it could spark a broader movement to levy wealth taxes on ultra-high-net-worth individuals in other states, at the federal level, and internationally. A recent Public Policy Institute of California poll shows 52% of likely voters favor the tax, compared with 46% opposed, while competing measures to limit new taxes or prohibit taxes on financial assets also enjoy majority support.