Billionaires are hedging California's wealth tax for about twelve basis points

Start with the gross figure that neither campaign quite states. Five percent of the more than $2 trillion held by the roughly 200 people the measure would reach ^[6] is upwards of $100 billion of theoretical liability ^[1], and the Legislative Analyst's Office will commit only to tens of billions over several years ^[8], a haircut of half or better that the state's own scorer attributes to moving stock prices and to the difficulty of knowing what actions billionaires would take to reduce the amount of tax they pay ^[9].

Now price the responses. More than $118 million has gone into Propositions 41 and 42 ^[15], the pair funded through Building a Better California ^[12] that would force audits of programs financed by new special taxes and outlaw retroactive taxation outright ^[13][14]. Against $100 billion of gross exposure, that campaign is running at about twelve basis points ^[2], roughly a tenth of a cent for every dollar at stake, which makes ballot language the cheapest instrument available to the people being assessed.

Relocation is the expensive one, and six people have bought it ^[4]. Six out of about 200 is 3 percent of the headcount ^[3]; at the arithmetic average of $10 billion each ^[4] that is $60 billion of base and $3 billion of tax out of reach before a single vote is cast ^[5]. The average is a crude stand-in for a distribution nobody has published, so treat the $3 billion as an order of magnitude rather than an estimate.

The form of the bill matters more than its size for anyone whose net worth is a mark rather than a balance. Mark Cuban's point on X, that the founders of ten-billion-dollar startups are cash poor and stock rich because little of what they raise ever reaches them ^[18], describes a liability denominated in dollars sitting on wealth held in stock ^[19], and spreading payment over five years costs more than paying at once ^[7], so the menu is a sale, a loan, or the installment premium.

For the state the trade is a one-time take in the tens of billions ^[8] against under $1 billion a year of ongoing income-tax revenue lost to departures and behaviour changes ^[10], plus tens of millions of administrative cost ^[11]. Take $30 billion as a midpoint and that is roughly thirty years of foregone base bought with one payment ^[6], which might be worth doing at any plausible discount rate, except that nobody in this fight has published one.

My read, and it is a reading of the check-writers rather than the electorate: the 17-4 in San Francisco ^[1] is information about where the base sits, because that is the city holding the densest concentration of founders, investors and executives whose wealth is in stock rather than cash ^[19], and 48 to 41 in the Berkeley Institute of Governmental Studies poll ^[16], with 11 points unallocated ^[7], is not a margin built to absorb $118 million of organised opposition. The counter-thesis is sturdy, or rather the more interesting version of it is: 194 of the 200 stayed ^[3], the sponsors are labour rather than a lone donor, with SEIU-United Healthcare Workers West placing it on the ballot and the California Labor Federation, the Teamsters, Ro Khanna and Bernie Sanders behind it ^[17], and a permanent leak of under $1 billion a year ^[10] is a price a state that leans this hard on wealthy residents ^[19] might rationally pay. This is probably wrong, but the residency terminations are the series I would trust over the polling. I abandon the thesis if that count is still in single digits in November and Proposition 42 loses.