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Six Nobel laureates endorse a one-time 5% tax on California's $2.3 trillion of billionaire wealth
A letter from six Nobel economists asks Californians to treat Proposition 40 as the start of a movement other states, Washington and other countries copy. The vote is in November, and the state's own pollster has supporters behind.
The Investor · Invest desk
What happened
- Six Nobel Prize-winning economists published a letter on Saturday endorsing Proposition 40, the California ballot measure taxing residents worth more than $1 billion.
- The letter estimates the state's 250 billionaires are collectively worth $2.3 trillion and pegs a one-time levy at 5% of assets.
- It says the state income taxes those billionaires paid came to only 1.6% of their $1.4 trillion wealth gain between 2019 and 2025.
- A Public Policy Institute of California poll has likely voters at 52% yes and 46% no on the wealth tax, with the ballot in November.
- Two competing measures that would nullify Prop 40 also have majority support, including Proposition 41 at 51% to 44%.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- constraint Whether California collects turns on the second measure: Prop 42 would ban taxes on financial assets other than real estate and leads by 11 points against Prop 40's 6.
- cost Assessed on holdings rather than income, the levy asks this group for roughly 5.1 times in a single payment what it paid in state income tax across 2019 to 2025.
- decision Khanna's carve-out for illiquid stakes and voting shares leaves the taxable base open, so a founder has to plan for a cash bill against stock they cannot freely sell.
- exposure The IPO calendar widens who owes: SpaceX's June listing, Anthropic's planned one and a possible OpenAI listing next year each add names above the $1 billion line.
There are two revenue figures on offer. Five percent of $2.3 trillion is $115 billion [1]. SEIU-UHW, the union pushing the measure, says the tax could raise $100 billion and help offset federal cuts to health spending [7], about 13% below the static number [2]. Spread across 250 names, the average holding is $9.2 billion and the average bill $460 million [5].
Sergey Brin has contributed more than $100 million toward opposing the tax [10]. That is roughly 22% of the average bill [6], and for a holder well above average it is cheap. Jensen Huang said he is "perfectly fine" with it [9].
Ro Khanna backs Prop 40 and has conceded he does not want illiquid stakes or voting shares taxed [8], while opponents say the tax would force founders to sell big pieces of their companies [19]. The letter treats coming listings as growth in the billionaire count, noting that SpaceX went public in June, that Anthropic plans its own IPO later this year and that OpenAI could follow next year [11].
The laureates' answer to the capital-flight case is that California has attracted 80% of all new venture capital funding in the United States since the start of 2026, up from about 50% before 2025 [12]. Fears of the tax surfaced among billionaires in late 2025 [13]. So the figure covers a window that closes before anyone votes.
The letter forecasts that a yes vote travels. "If the state that houses some of the country's most powerful billionaires votes to tax their wealth, it will kickstart a movement to tax ultra-high-net-worth individuals in other states," the economists wrote [14]. The argument against is that California's levy is unlikely to be a one-time deal [20].
The template argument weakens once you ask what a copycat legislature would actually be copying. A yes on Prop 40 alongside a yes on Prop 42, which would prohibit taxes on financial assets and personal property other than real estate [16], gives other states a measure that won a ballot and collected nothing. I'd expect that outcome, because the same survey that has Prop 40 at 52% yes and 46% no [15] has Prop 42 ahead 54% to 43% [16]. There is a counter-case: a 6-point lead with turnout on the union's side is a winnable fight, and so far Prop 42's margin has held only in polling.
Mark Baldassare, who directed the survey, told KQED that "Supporters of Proposition 40, the so-called billionaire tax initiative, have a lot of work to do" [18]. Some unions also oppose the measure, saying other areas of state spending should be priorities too [21].
What to watch
- A later PPIC survey showing Prop 42's 11-point lead narrowing would matter for whether a yes on Prop 40 is collectable.
- Opposition spending disclosures after Brin's $100 million, and whether any billionaire funds the yes side at comparable scale.
- Whether legislators in other states introduce a copycat asset levy before November, which is the letter's own test.