California Tax Scholars Overwhelmingly Oppose Billionaire Tax Proposal

A recent survey has found that a significant majority of tax scholars in California would vote against the proposed billionaire tax, which aims to impose a one-time tax of 5% on the wealth of the state's approximately 250 billionaires.

The survey, conducted by Jeff Hoopes, a professor at the University of North Carolina and research director of the UNC Tax Center, targeted members of the National Tax Association, a professional group comprising mostly academic economists, accountants, and lawyers. The respondents included 105 tax scholars who were asked about their stance on Proposition 40.

Among the survey participants, 73 (69.5%) expressed opposition to the proposed billionaire tax, while 32 (30.5%) supported it. Interestingly, a significant number of experts from specific fields showed strong disapproval for the measure. For instance, accountants were overwhelmingly against the tax, with an impressive 85% opposing it.

Economists also demonstrated considerable skepticism towards Proposition 40, with 71% opposing the tax. In contrast, lawyers seemed more supportive, with 60% favoring the measure. This disparity in opinions is noteworthy, especially considering that law professors played a significant role in drafting the proposal.

It's worth noting that these tax scholars are not necessarily opposed to the idea behind the proposed billionaire tax but rather have concerns about its implementation and potential consequences.

The survey's findings suggest that there are two distinct camps among those opposing California's billionaire tax proposal.

Some respondents who would generally favor wealth taxes expressed reservations about Prop 40 due to concerns over its implementation and potential consequences. They argued that a single state may struggle to enforce a wealth tax, particularly when billionaires can easily relocate their assets and residences. This sentiment was echoed in written comments submitted by some survey participants.

Others opposing the proposal went further, questioning the feasibility of implementing a one-time tax on private companies without sparking costly disputes over valuations. They also expressed concerns that such a tax could ultimately become a recurring feature, rather than a one-off measure.

According to Hoopes, another major concern is the potential for billionaires to relocate from California in response to the proposed tax. He noted that Norway's experience with its wealth tax serves as a cautionary tale: when the very richest individuals moved out of the country in response to the tax, it significantly impacted the government's revenue projections.

The proposed billionaire tax in California has raised concerns among experts about its potential impact on the state's economy and revenue. One of the key issues highlighted is that high-net-worth individuals may be incentivized to leave the state, citing taxes as a major reason.

This scenario is not far-fetched, given examples like Elon Musk, who relocated from California to Texas partly due to tax concerns. This could potentially lead to other wealthy individuals following suit, further exacerbating the state's revenue woes.

In light of these concerns, some experts suggest that rather than imposing an additional wealth tax, the state should focus on reducing its spending and living within its means. They argue that California already has one of the highest top income tax rates in the country.

The potential revenue generated by the billionaire tax is also being scrutinized, with estimates suggesting it could raise as much as a 5% income tax on all Californian taxpayers or even fund federal Medicaid cuts to the tune of $100 billion.

A recent survey has revealed that about 70% of tax scholars would vote against California's proposed billionaire tax. The poll was conducted by Greg Hoopes, who ran it after six Nobel Prize-winning economists endorsed the measure in September. These economists included Paul Krugman and Joseph Stiglitz, known for their left-leaning views.

However, the survey results suggest that even liberal-minded economists may not support the billionaire tax. Hoopes noted that his personal contacts among economists were more aligned with the 105 respondents to his survey than the six Nobel Prize winners who endorsed the measure. The poll's credibility is also subject to scrutiny, as it was based on a 2024 membership directory and did not receive approval from the National Tax Association (NTA).

The NTA has no affiliation with Hoopes, who sits on the advisory council of the right-leaning Tax Foundation. In contrast, voters are more evenly divided on the issue, with 52% supporting Prop. 40 in a September poll conducted by the Public Policy Institute of California.