Key facts
- Stanford economists estimate California's proposed billionaire tax will raise $28B-$36B, not $100B.
- Economists project a net loss of $38.9B for California if billionaires leave and stop paying income taxes.
- Seven billionaires reportedly left California before the tax's residency cutoff date.
Stanford economists Benjamin Jaros and Joshua Rauh estimate that California's proposed Proposition 40, a one-time 5% tax on billionaires, could generate between $28 billion and $36 billion. This figure falls significantly short of the $100 billion projected by supporters. The economists' analysis, published in a National Bureau of Economic Research working paper, suggests that the state could ultimately lose money if its wealthiest residents relocate. They identified seven billionaires, including Google cofounders Larry Page and Sergey Brin, who have reportedly left California before the January 1, 2026, residency cutoff for the tax. The researchers project an average net loss of $38.9 billion for the state if these individuals cease paying annual income taxes. Their simulations indicate that in 85% of scenarios, the revenue losses would outweigh the tax collections. Sergey Brin is also actively opposing the measure. However, Nvidia CEO Jensen Huang has stated he would consider paying the estimated $8 billion tax over five years a "privilege," and Meta CEO Mark Zuckerberg ultimately decided to remain in California despite considering a move due to the tax. Several Nobel Prize-winning economists have also voiced support for the proposal, viewing it as an opportunity to curb the influence of the wealthy.