A new working paper by Stanford Hoover Institution economists Joshua Rauh and Benjamin Jaros estimates that Prop 40, the one-time billionaire tax, would collect about $30 billion but leave California with a net loss of $38.9 billion, according to the paper posted by the National Bureau of Economic Research.
Why it matters: Prop 40 would tax the state's roughly 200 billionaires, The San Francisco Standard reported. With the Nov. 3 vote a week away, the study and a labor split are shaping the final arguments.
What the study says
The paper estimates the 5% tax on net worth above $1 billion would raise $28 billion to $36 billion. That is less than a third of the $100 billion that supporters' experts projected. The authors say confirmed departures have already wiped out nearly 30% of the tax base. They estimate California billionaires pay $3.3 billion to $5.8 billion a year in state income tax, and that losing that permanently outweighs the one-time revenue. In 85% of 100,000 simulations, the state comes out behind.
The pushback
Supporters argue the study weighs a one-time tax against income tax losses that last forever, The San Francisco Standard reported. UC Berkeley economist Gabriel Zucman has said residency is fixed as of Jan. 1, 2026, so moving now does not avoid it. Jaros told the Standard the timing was a coincidence and called the $100 billion estimate "magic money."
Labor splits
The California Teachers Association and the State Building Trades oppose Prop 40. But United Educators of San Francisco, representing about 6,500 teachers and staff, endorsed it unanimously, the Standard reported. Sheet Metal Workers' Local 104, with about 10,000 Bay Area members, also broke ranks. A Citrin-Politico poll found 46% in favor and 43% opposed.