California’s Proposed Billionaire Tax Sparks Debate

This week, the main proponent of California’s contested billionaire tax made an interesting admission: the proposed one-time tax could turn into something more permanent.

Economics professor Emmanuel Saez confirmed this during a debate at the University of California, Berkeley, against Arthur Laffer, who is well-known for promoting trickle-down economics.

The Billionaires’ Tax, introduced by the Service Employees International Union and the West Health Care Workers Union, would impose a one-time 5% levy on Californians with net worth exceeding $1 billion. Supporters argue that this tax is essential to remedy health care funding gaps caused by recent Medicaid cuts and other federal program reductions.

Although the proposal hasn’t officially made it to the November ballot yet, supporters mentioned that they’ve gathered enough signatures to move forward.

The debate moderator pressed Saez on whether this tax could become more than a one-off. He pointed out that a previous California tax, once labeled temporary following the Great Recession, ultimately became extended.

“There was talk about adjusting the proposal to make it permanent,” the moderator noted, inquiring about how this billionaire tax would differ.

Saez replied that the current proposal is squarely focused on “immediate funding needs” for health care.

“This is essentially an experiment. We’ll monitor the outcomes and decide if it’s worthwhile,” he explained.

“If a new tax comes along, it likely won’t just be a one-time thing. You can’t keep surprising billionaires like that,” he added, perhaps with a hint of uncertainty.

If the tax is approved, Saez suggested discussions might shift toward enacting a permanent version at a lower rate lasting several years. He also noted that it will be interesting to observe if other governments adopt California’s approach or similar wealth tax measures.

However, he was candid about the future: “I can’t assure anyone this is a one-time situation or that there won’t be more wealth taxes in the future.”

Laffer countered by raising concerns about billionaires who have already left California—prominent tech figures like Sergey Brin—possibly not returning even after this one-time tax concludes, for fear of its reinstatement.

The proposed tax has ignited a flurry of campaign ads and competing ballot initiatives ahead of the election. Many Democrats, including Governor Gavin Newsom, have voiced their opposition, arguing it could harm California’s economy.

During a debate, billionaire gubernatorial candidate Tom Steyer, a Democrat, expressed his intention to support the one-time tax but added that it “falls short.”