The absurdist playwright Eugène Ionesco wrote Exit the King. It stands out in Ionesco’s canon as a play whose plot is straightforward and focuses on depletion rather than accumulation. In that sense it resembles the proposed billionaire tax that threatens to make its way onto the California ballot this November. We have been following the proposed tax and its federal counterpart in several posts on Power Line (with more to come).
Hoover Senior Fellow Joshua D. Rauh debated the efficacy of the proposed California billionaires’ tax with one of its creators at Stanford this past March 6, arguing it will leave the state poorer in the long run. I have adapted the summary below from a Hoover post. Long story short:
Just out: California’s wealth tax proposal has a NEGATIVE $25B net present value. We project only ~$40B collected (vs. $100B claimed), with ~30% of the tax base already gone and lost income taxes wiping out gains. w/ Ben Jaros, @gregkkearney, John Doran & Matheus Cosso:… pic.twitter.com/U7OjtDKJuv
— Joshua Rauh (@joshrauh) March 5, 2026
In a debate with University of California–Berkeley economist Emmanuel Saez, a key architect of the proposed wealth tax, Rauh pointed to his own research showing the net present value of the tax is likely negative, meaning it will drive jobs and investment away from California for years if it is passed.
Proponents of the wealth tax “would liquidate Silicon Valley for an extra $2 billion per year,” Rauh said. “This is classic, not showing or considering what the economic damage would be of liquidating Silicon Valley.”
Rauh’s study shows the proposal would leave the state worse off by an estimated $25 billion once future lost income tax revenue is considered. See Benjamin Jaros, Joshua D. Rauh, Gregory Kearney, John Doran, Matheus Cosso, “The Net Present Value of the Billionaire Tax Act: An Assessment of the Fiscal Effects of California’s Proposed Wealth Tax.”
The authors have posted a convenient summary of the study at the Liberty Lens Substack site. In addition, Rauh has posted the text of his opening debate statement here on Liberty Lens.
The study finds that the one-time levy would collect approximately $40 billion in wealth tax revenue, less than half of the roughly $100 billion projected by proponents. This is because many billionaires have already departed California even before the initiative has qualified for the ballot.
In the debate, Saez contended that the tax is useful because federal transfers for things like Medicaid are set to decline over the next two years. He also said that the combined wealth of California’s billionaires has grown by 140 percent over the last three years to a total of $2 trillion.
Rauh’s team has found that $2 trillion wealth figure has fallen by as much as $536 billion already, as billionaires exit the state in response to the mere proposal of the new tax.
An additional $250 billion was never taxable to begin with: The proponents’ estimate included three individuals who were not California residents at the time of filing, most notably Oracle founder Larry Ellison, who moved to Hawaii in 2020. After correcting for both the departures and the baseline errors, the actual taxable wealth base is approximately $1.2 trillion.
“We found that six of the billionaires, including the top two, [Sergey] Brin and [Larry] Page, left California between the time that this proposal was announced and December 31, 2025,” Rauh said.
Quotable quote: “This tax is billed as one time, but why would anybody believe that it’s a one-time tax? I mean the measure has to write its wealth tax authorization into the California Constitution. It’s written in a way that’s specific to this measure, but once that infrastructure is in place, future wealth taxes can be built on top of it, on top of this infrastructure, at any rate, at any threshold, and at any time. The important point is that billionaires understand this. That’s why they’re leaving…”
The debate was held as part of the Stanford Institute for Economic Policy Research’s 2026 Economic Summit. It did not touch on matters of principle that John and I touched on in our old American Enteprise essay on the income tax. I have posted video of the debate below. I found it well worth my time.
