Stanford Economists Warn California Billionaire Tax Means $39 Billion Loss

California's proposed billionaire tax could leave the state $39 billion worse off in today's dollars, according to Stanford economists Benjamin Jaros and Joshua Rauh — even though it would first hand Sacramento roughly $30 billion.

Proposition 40, on California's Nov. 3 ballot, would impose a one-time 5% tax on the net worth of the state's few hundred billionaires who were residents on Jan. 1, 2026. Payment falls due in 2027. Those spreading payments over five years pay more. Real estate, pensions and most retirement accounts stay excluded. Supporters, including the sponsoring union SEIU–United Healthcare Workers West, pitch $100 billion in proceeds, with 90% earmarked for health care.

What do the Stanford numbers actually say?

Jaros and Rauh, affiliated with Stanford's Hoover Institution, published a working paper this month through the National Bureau of Economic Research. They estimate collections of about $30 billion, in a range of $28 billion to $36 billion. That's less than a third of what proponents expect.

Their explanation is blunt: billionaires can move. Drawing on Forbes billionaire rankings, real estate reports and public relocation announcements, they estimate departures have already erased nearly 30% of the proposed tax base. Seven billionaires who have publicly left California — including Peter Thiel and Google cofounders Larry Page and Sergey Brin — account for roughly $540 billion in wealth, CBS News reported, citing the study. The estimate also discounts the remaining base for the risk that courts strike the tax down.

The new figure sharpens a downgrade. The authors' earlier Hoover analysis projected about $40 billion in revenue and a $25 billion net loss. The takeaway now: the one-time haul shrinks, and the long-term hole grows.

Where does the $39 billion hole come from?

The bigger worry is what follows collection. The researchers estimate billionaire departures could cost California $1 billion to $3.5 billion a year in lost income tax revenue. Run indefinitely, that future shortfall outweighs the one-time wealth tax proceeds by $38.9 billion in today's dollars. Across 100,000 simulations with varying revenue and discount-rate assumptions, 85% produced a net loss.

Caveats matter. Those losses are projections, not money California has already forfeited. And a relocation announcement isn't the same as escaping the tax: liability turns on residency as of Jan. 1, 2026. Economists who helped design the measure argue some high-profile leavers, including Brin, likely remained California tax residents on that date given their ongoing ties to the state.

SEIU–United Healthcare Workers West disputed the research, telling CBS News the proposition exists to prevent the collapse of California's health care system.

Why other economists see it differently

A separate NBER study by Jasper Boll, Emmanuel Saez and Gabriel Zucman reached the opposite conclusion. Even if every billionaire permanently left, accumulated income tax losses would take roughly 25 years to match the proposed $100 billion windfall, Fortune reported in May. Saez advised on the ballot measure's design unpaid.

An August revision raised the authors' estimate of what California billionaires paid in state income taxes in 2025 from $4.1 billion to $4.3 billion. The revision also attacks the Stanford method directly: it's inconsistent, the authors argue, to treat the wealth tax as one-time while treating the migration it triggers as permanent. Absent further wealth taxes, some billionaires could return and new fortunes could replenish the tax base.

California's nonpartisan Legislative Analyst's Office splits the difference: tens of billions raised over several years, with annual income tax revenue potentially down by less than $1 billion.

The backdrop is a widening wealth gap. Federal Reserve data show the richest 1% of U.S. households held a record 32.5% of national net worth in Q2 2026, up from 31.1% a year earlier; the bottom half held 2.3%, down from 2.4%.

Who's spending what to kill it?

Tech billionaires have raised more than $340 million to oppose the measure and back related initiatives, according to the Guardian's review of campaign finance disclosures. Brin, the largest donor, has given more than $100 million. Donors include former Google CEO Eric Schmidt, Palantir cofounder Peter Thiel, Stripe CEO Patrick Collison and DoorDash CEO Tony Xu. The opposition campaign spent at least $21.2 million in the first 19 days of September alone.

Gov. Gavin Newsom opposes the tax too, arguing it could drive wealthy residents and their income tax payments out of state. On Oct. 9 he endorsed Proposition 42, a Brin-funded competing measure that would bar retroactive taxes and ban new state taxes on personal property — effectively blocking Prop 40. Newsom instead proposes a national minimum tax on Americans worth more than $100 million. Prop 42 and a second countermeasure, Proposition 41, each nullify the billionaire tax if either outpolls Prop 40.

Voters look split: a Citrin Center–Politico poll found 46% of likely voters in favor, 43% opposed.

Not every billionaire is running. Nvidia CEO Jensen Huang, a longtime California resident, said he'd be comfortable paying an estimated $8 billion in taxes over five years and called that ability a privilege. He has also urged people to move to California rather than leave.

Voters decide on Nov. 3. Even if Prop 40 passes, competing measures could keep it from taking effect — and it could take years to learn whether California comes out ahead or $39 billion behind.