A proposed tax targeting California's wealthiest residents is drawing strong support from likely voters, but critics warn it would discourage investment and trigger an exodus of high-income earners and businesses from the state.
"I think it's a really economically disastrous idea," Adam Michel, director of tax policy studies at the Cato Institute, told Fox News Digital. "It is both diagnosing the problem incorrectly and also won't fix the problem that is being diagnosed."
The "2026 California Billionaire Tax Act" would impose a one-time tax equal to 5% on the net worth on individuals making above $1 billion, according to California’s Legislative Analyst's Office (LAO). Covered assets would include businesses, securities, art, collectibles and intellectual property.
The measure would not count real estate someone owns in their own name (or through a revocable trust), but real estate held through a company they own could still factor into the tax because it can raise the value of that business.
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