When Seven Out of Ten Tax Experts Say No: California’s Billionaire Tax Meets the People Who Study Taxes for a Living
(SeaPRwire) –
Here is something Sacramento would rather not discuss at fundraisers. The people who spend their careers modeling tax incidence just got polled on Proposition 40, and the verdict was brutal. Jeff Hoopes of the University of North Carolina, research director of the UNC Tax Center, surveyed members of the National Tax Association, a professional body of academic economists, accountants, and lawyers. Out of 105 respondents, 73 said they would vote against the one-time 5% levy on California’s roughly 250 billionaires. Only 32 would vote for it. That is a 69.5% rejection rate from the single profession best positioned to understand the mechanics. And here is the twist that should unsettle both camps in this fight: the opposition is not monolithic. Hoopes himself split the dissenters into two groups. One rejects wealth taxation outright. The other actually favors wealth taxes in principle but concluded this specific design fails on enforceability. When your friendliest possible jury convicts on craftsmanship rather than ideology, the drafters have a problem that no amount of Nobel endorsements can paper over.
The official case for Prop 40 rests on seductive arithmetic. Backers say the tax could raise revenue comparable to a 5% income tax on every California taxpayer, potentially around $100 billion, enough to backfill federal Medicaid cuts. Three tax-law professors, Brian Galle, David Gamage, and Darien Shanske, wrote much of the measure. Six Nobel Prize-winning economists, including Paul Krugman and Joseph Stiglitz, endorsed it in September. That is a formidable roster. Yet look at the profession-level data beneath the headline. Accountants opposed the measure 17 to 20 at 85%. Economists rejected it 49 of 69, or 71%. Only lawyers leaned in favor, 9 of 15, or 60%. In other words, the discipline that drafted the tax supports it, while the disciplines that would have to administer, value, and model it do not. Hoopes admitted he ran the survey because he was baffled by the Nobel endorsements, given that even left-leaning economists he knew opposed the measure. His sample turned out to look nothing like the laureates’ letter.
The subtext is mobility, and this is where theory collides with state borders. Respondents in the “good idea, bad execution” camp said they would support a federal wealth tax, but doubted a single state can enforce one when billionaires and their assets can simply relocate. Others questioned whether a “one-time” tax stays one-time, or warned that valuing private companies invites endless costly disputes. Hoopes points to Norway, where the very richest moved in response to the wealth tax, and notes it would not take many departures at the top to gut the revenue projections. Elon Musk already left California for Texas, citing taxes among his reasons. California carries the highest top income tax rate in the nation, which lowers the marginal psychic cost of one more push. A Hoover Institution working paper estimates the state could lose more in future income tax revenue than the wealth tax collects. The drafters’ own estimate supports the $100 billion figure. Two models, two Californias. Voters, meanwhile, split far more evenly than scholars: a September Public Policy Institute of California poll found 52% of likely voters back Prop 40, though majorities also backed Props 41 and 42, measures funded largely by Sergey Brin that would effectively cancel the tax. The survey carries caveats worth stating plainly. Hoopes used a 2024 membership directory, the NTA did not sponsor the poll, and he sits on the advisory council of the right-leaning Tax Foundation.
Strip away the academic signaling and the fiscal logic turns stark. A state near the top in both spending and taxes per capita is attempting to close a budget gap by taxing a mobile asset base one time, at 5%, against valuations that will be litigated for years. Hoopes put it in household terms: a friend earning $600,000 while spending $700,000 does not need a side hustle, he needs to live within extraordinary means. The deeper risk is credit, not cash. States that signal willingness to retroactively reclassify accumulated wealth as a revenue reserve teach capital to price that jurisdiction accordingly. Once residency flight compounds into lost future income tax, the $100 billion promise becomes a shrinking asset chasing a fixed spending habit, and that is how sovereign-grade credit quietly erodes.