The current “billionaire tax” being sold to Californians is supposedly aimed at only the very wealthiest, but in The Wall Street Journal, David R. Henderson details a convenient escape clause written into the law. It could allow California’s legislators to tax everyone even more than they already do. He writes:
California’s Proposition 40 would impose a one-time tax of 5% on people with a net worth of $1 billion or more. The tax would cost everyone: By discouraging capital formation, it would ultimately cause slower wage growth. But there’s a much more direct threat to people worth far less than $1 billion.
The initiative’s Section 50310 states: “The Legislature may amend the 2026 Billionaire Tax Act, by statute passed in each house of the Legislature . . . [with] two-thirds of the membership concurring, if the statute is consistent with and furthers the purposes of the 2026 Billionaire Tax Act.”
Those purposes are to raise money to spend on healthcare, education and food assistance. California’s heavily Democratic Legislature could use the law to increase taxes on people who aren’t close to being multimillionaires—let alone billionaires.
Read more here.
