It might seem that public policy insanity has reached an end in California. After all, what more could the state’s malevolent progressive politics concoct to make it more hostile to business, innovation, enterprise, and hard work than it already is? How about a tax on those who drive the economy? Yes, that should do it.

The Service Employees International Union-United Healthcare Workers West and St. John’s Community Health in Los Angeles have teamed up to concoct the 2026 Billionaire Tax Act, a citizen-initiated statute that might appear on the ballot next November. Should it pass, it would levy a “one-time 5% tax on California billionaires in this emergency situation.” Revenues would lift a budget “facing significant cuts to health care and education” by changing the California Constitution.

Just a “one-time” tax. Does anyone really believe that?

Apparently, billionaires Peter Thiel, a co-founder of PayPal and Palantir Technologies, and Larry Page, a Google co-founder, don’t. The New York Times reports that both of them, as well as other billionaires, “are considering cutting or reducing their ties to California” because of the tax. 

Democratic Rep. Ro Khanna, who represents much of Silicon Valley, has drawn the righteous fury of wealthy tech barons by supporting the tax. But rather than planning to leave California, their aim is to drive him out of office in the next election cycle. One, however, Vinod Khosla, who founded both Sun Microsystems and Khosla Ventures, said that Khanna is wrong to get behind the measure and assume that a small tax on wealth will not provoke billionaires to skip out of the state.

“Top prospects for generating wealth in the state will almost certainly leave the state. Every advisor would advise every enterprise that gets big momentum to have key people relocate to another state,” Khosla tweeted Sunday. “Even people who don’t expect this initiative to pass are still planning to leave because there will be another one is the argument. And California will lose its most important taxpayers and net off much worse. Long-term damage unless legislature bans wealth taxes.”

The sadistic progressive bloc that dominates California politics argues the tax is “fair because billionaires have used state resources to create their enormous wealth and were the largest beneficiaries of the federal legislation that contributed to the current California budget crisis.”

It’s just another example of the lousy politics of jealousy that fully ignore the role of the wealthy in a robust economy.

Wealth taxes are economic vandals. At one time, more than a dozen European countries had one variation or another of a wealth tax. The landscape has since changed. The Tax Foundation of Europe says that now only three nations, Norway, Spain, and Switzerland, have kept their wealth taxes. The others repealed theirs “for a variety of reasons.” But it’s known that wealth taxes “raise little revenue, create high administrative costs, and induce an outflow of wealthy individuals and their money.”

Apparently, “many policymakers” in Europe “recognized that high taxes on capital and wealth damage economic growth.” 

If California’s proposed wealth tax becomes law, it, too, might one day be repealed for the reasons listed above. But no one should kid themselves about it being a “one-time” levy. California voters approved Proposition 30 in 2012, a “temporary tax” on the state’s high-income earners to underwrite education spending. It was extended in 2016. For now, it will sunset in 2031. But there’s never enough of someone else’s money, so the usual agitators want to make it permanent by placing it on the 2026 ballot in tandem with the Billionaire Tax Act.

California’s hole is already deep. Businesses and people are fleeing because lawmakers and blue voters are stuck in a Bolshevik rut. The dead weight of yet another tax won’t be fatal, but it will be one cut of the thousand that lead to death.

— Written by the I&I Editorial Board

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