Economists Champion Billionaire Wealth Tax to Combat Extreme Inequality in California
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A coalition of Nobel Prize-winning economists has thrown its weight behind Proposition 40, a one-time 5% wealth tax targeting California’s billionaire class, arguing it could generate $100 billion to address rampant inequality and serve as a blueprint for progressive reform nationwide.
A letter signed by esteemed economists such as Daron Acemoglu, Abhijit Banerjee, Peter Diamond, Esther Duflo, Paul Krugman, and Joseph Stiglitz expresses strong support for Proposition 40, a bold measure to impose a one-time 5% tax on the colossal fortunes of California residents whose net worth exceeds $1 billion. The signatories highlight the staggering reality that just 250 billionaires in the state control approximately $2.3 trillion in wealth, while the state’s tax system has barely scratched the surface—capturing a mere 1.6% of a projected $1.4 trillion increase in billionaire wealth from 2019 to 2025.
“California is the right place to take this historic step,” the economists wrote, emphasizing that the obscene concentration of billionaire wealth has made the state one of the most unequal in the country, fueling social and economic disparities.
Proponents, including the Service Employees International Union-United Healthcare Workers West, estimate the tax could raise $100 billion, providing crucial resources to offset federal cuts to healthcare and other vital services. Supporters reject fearmongering about Silicon Valley’s future, pointing out that the region continues to dominate venture-capital funding, attracting 80% of new investments since early 2026.
Opponents, largely representing entrenched corporate interests, claim the tax could stifle economic growth and force company founders to sell off their stakes. Governor Gavin Newsom, siding with the billionaire class, opposes the measure, while Representative Ro Khanna supports it but urges caution regarding illiquid assets. Some unions have unfortunately echoed the governor’s concerns. Tech elites are divided: Nvidia CEO Jensen Huang is “perfectly fine” with the tax, while Google co-founder Sergey Brin has poured over $100 million into fighting it, demonstrating the lengths the ultra-wealthy will go to protect their fortunes.
The economists argue that if California leads the way, it could ignite a movement to tax the ultra-rich across the nation and even globally, finally holding them accountable for their outsized influence and hoarded wealth. A recent Public Policy Institute of California poll shows that a majority—52%—of likely voters support the tax, despite relentless opposition from billionaire-backed campaigns. Competing measures to limit or prohibit new taxes on financial assets also have majority support, underscoring the high stakes in the fight for economic justice.