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Friends,
The 2026 Billionaire Tax Act initiative recently submitted enough signatures to be put on the California ballot for the November 2026 elections. Its goal is to raise revenue by imposing a one-time 5 percent wealth tax on California billionaires to offset large cuts to California’s Medicaid caused by the Trump regime and Congress when, in July 2025, they cut federal taxes mainly on the wealthiest.
The reason for targeting California billionaires for new revenue is their wealth has grown faster than anyone else’s in recent years and they currently pay low taxes relative to their large wealth gains. Many borrow against their wealth for living expenses (banks are delighted to lend to them), enabling them to claim little or no taxable income.
As a result, taxing billionaires can both raise substantial revenue and restore tax progressivity at the very top. California is in the vanguard of what the nation must do. I believe they will do it when Democrats are back in control, and when they enact campaign finance reforms so no member of Congress is necessarily dependent on the super-wealthy for the bulk of their campaign contributions.
The following oped appeared in today’s New York Times. It was written by two of my colleagues at Berkeley, Professors Emmanuel Saez and Gabriel Zucman (who is also at the Paris School of Economics). I have reproduced it in its entirety, with permission, and have highlighted paragraphs I believe to be particularly important.
They make the case for the billionaire wealth tax in California, and indirectly for a billionaire wealth tax nationwide. They also answer the arguments against the tax, such as that California billionaires may leave the state in expectation that such wealth taxes would be renewed, possibly reducing future income tax revenue to the state and reducing its economic dynamism as the engine of tech innovation.
With wealth inequality now surging beyond anything ever witnessed in America, the dictum attributed to Justice Louis D. Brandeis has become dramatically relevant: “America faces a choice: We can have great wealth in the hands of a few, or we can have a democracy, but we cannot have both.” A wealth tax is a necessary precondition for everything else.
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The billionaire class in California includes roughly 250 households, a mere 0.001 percent of the state’s families. Yet its wealth now amounts to more than half of California’s entire annual economic output.
This means that if these billionaires spent all of their wealth, they could buy more than half of the goods and services produced in a year in the entire state.
This extraordinary wealth does not translate into extraordinary tax contributions.
From 2019 to 2025, California billionaires’ wealth grew an average of over 15 percent per year, while they paid, on average, just 0.26 percent of their wealth annually in state income taxes. Their income tax payments accounted for only 2.4 percent of California’s income tax revenue.
For the very richest individuals, the effective burden was even lower. The four wealthiest Californians — former Google co-founder Sergey Brin, Nvidia’s Jensen Huang, former Google CEO Larry Page, and Facebook’s (Meta’s) Mark Zuckerberg — paid an average of just 0.07 percent of their wealth annually in California income tax over that period, according to our analysis of Securities and Exchange Commission records on stock sales and executive compensation from their companies.
California’s tax system fails to effectively tax ultrahigh-net-worth individuals. The same is true of the United States’ tax system and those of other countries.
The problem is that billionaires’ fortunes are largely held in assets (mainly stocks) that rise in value over time. This rise in value is not taxed unless the assets are sold. Under current law, when billionaires don’t sell their stock, wealth accumulates while taxes on their gains are deferred indefinitely and sometimes avoided entirely.
To understand how California’s billionaires have become so unfathomably rich, it’s helpful to think of their fortunes as icebergs. Some earnings are easy to see — and tax. From 2019 to 2025, Mr. Zuckerberg reported more than $7.1 billion in income from Meta: $181 million in compensation, $1.4 billion in dividends and $5.6 billion in gains from selling stock.
Despite making so much money, Mr. Zuckerberg was taxed a combined state and federal rate of just 27 percent on that income. That’s not much higher than the average California household’s effective tax rate of about 20 percent.Mr. Zuckerberg’s tax rate was relatively low in large part because most of his income was in the form of capital gains — what he made from selling stock that had risen in value. Capital gains are taxed federally at a lower rate than ordinary income.
Most of Zuckerberg’s wealth is hidden from income taxes. Since 2019, Meta has made hundreds of billions of dollars in profit. As Meta’s chief executive, Mr. Zuckerberg has invested much of that money back into the company, of which he owns about 13 percent. These profits have been taxed at a relatively low 17 percent, Meta’s effective corporate income tax rate. Their reinvestment has boosted the company’s value and, therefore, the value of its shares. This caused Mr. Zuckerberg’s wealth to rise by tens of billions of dollars.
The same is true of the wealth Mr. Zuckerberg accumulated as Meta grew and investors became more bullish about the company. This dynamic increased the value of his shares by an additional $142 billion. Unless Mr. Zuckerberg sells his shares, all of this growth remains untaxed.
But he can put his gains to use without selling them, borrowing tax-free against his holdings at low interest rates, as he did in 2023, when he pledged $3.1 billion worth of his Meta shares as collateral for a loan.
California’s other top billionaires have similarly structured fortunes. Without a wealth tax, these tech barons will continue to hoard the rewards of the state’s economic growth while its cities cut services and its workers lose health care.
Google’s founders, Mr. Brin and Mr. Page, are the state’s richest individuals, with more than $600 billion in wealth between the two of them — up from $345 billion last September. They have come out against the wealth tax initiative while making moves to leave the state. They benefit from the status quo.
Mr. Brin has funded the political campaign against the measure and has funded signature collection for two competing ballot initiatives that could undercut the wealth tax, spending at least $57 million to fight it.
They stepped down from day-to-day management at the end of 2019. That year and in 2020 and 2023, each got from Alphabet, Google’s parent company, only $1 per year in executive compensation.
They didn’t sell stock, and they didn’t receive dividends or any other compensation relating to Alphabet, so they paid no income tax on their wealth related to the company. But their stock wealth rose by $133 billion, driven in part by the reinvestment of their share of company profits, which amounted to $20 billion in those three years. Scenarios like this show why some of the very wealthiest people in America are among the least taxed.
This arrangement violates basic principles of fairness, deprives the government of revenue it needs for public services and fuels wealth concentration.
Overwhelming wealth becomes power — power to influence the direction of corporate behemoths, power to sway society through donations and media ownership, power to steer politics through unlimited campaign contributions to super PACs.
Elon Musk’s recent adventures in the executive branch, after spending hundreds of millions of dollars to help elect Donald Trump, demonstrate how quickly concentrated wealth can transmute into political control.
We don’t imagine that a one-time 5 percent tax on the wealth of California billionaires, as proposed in the 2026 Billionaire Tax Act, would fix all these problems. But it could raise nearly $100 billion in revenue for California. This amount would make up for the funding the federal government is taking away from the state over the next five years. It would also be tiny relative to billionaires’ recent wealth gains.
In the past three years alone, the total wealth of California’s billionaires grew by a staggering 144 percent, to over $2 trillion.
Taking such a small bite out of billionaires’ exponentially growing tech wealth wouldn’t doom Silicon Valley because the value of California’s concentrated tech talent dwarfs the proposed wealth tax. Nvidia’s chief executive, Mr. Huang, who would be one of the biggest payers of the tax, said he would be “perfectly fine” with it.
Other myths about the proposal need to be dispelled. It would tax only billionaires. It has been carefully written to respect the California and U.S. Constitutions. It contains provisions designed to prevent taxation beyond 5 percent of the fair market value of anyone’s shares and to avoid hitting start-ups hard. Billionaire entrepreneurs, with sizable illiquid stakes in newly founded private companies, would be able to defer payments until they began to cash out.
It is too late for superrich Californians to flee the state to avoid the tax. If approved in November, the tax would apply to billionaires who were residents of California as of Jan. 1, 2026. Some affected taxpayers might have left between the ballot initiative’s introduction, in late October 2025, and the end of the year. But it is improbable that any significant number of billionaires fully cut ties with California in that short period.
Critics of the ballot measure have voiced concerns that even a small number of billionaires leaving the state would lead to lower state tax revenues overall. Their math doesn’t add up. California’s billionaires currently pay such a low tax rate that even if all of them left the state, it would take 25 years for the loss of their tax payments under the current set of rules to surpass the amount the state would raise if the one-time tax succeeds this fall.
In 2025, California collected $4.1 billion in income tax from its billionaires. We estimate that California would collect about 25 times that much revenue — about $103 billion — from the proposed wealth tax.
While billionaires who no longer run their businesses day to day may choose to eventually leave California, uprooting an established business that relies on the pool of California’s tech talent and tech ecosystem would be much harder: While Mr. Page and Mr. Brin may leave for Florida or Nevada, there are no discussions of Google leaving Mountain View.
California’s tech sector produces billionaires faster than any other state’s. Its superrich — who have benefited from the state’s infrastructure, universities and networks of people and businesses — have accumulated enormous fortunes almost tax-free. The proposed billionaire tax would finally make them contribute in modest proportion to their gains.
In November, California’s voters should show the nation the way forward.