California’s wealth tax vote – Expert comment

On 3 November next week Californians will vote on Proposition 40 - a one-time 5% tax on the net worth of California's billionaires. Dr Miriam Marra, Associate Professor of Finance at Henley Business School’s ICMA Centre said of the tax: 

“According to recent research, California billionaires hold more than $2 trillion in wealth while paying around 0.2% of that wealth annually in California income tax. At the same time, billionaire wealth in the state grew by 144% between 2023 and 2025, driven in part by the AI boom, while average family incomes have risen far more slowly.

And voters can see growing inequality, with many are asking why some of the largest fortunes contribute proportionally less than workers whose income arrives through a monthly payslip. That is why wealth taxes keep returning to the political agenda.

Even if it were to be voted through by Californians in November, the challenge is not primarily the moral case but the practical one. Wealth is not like wages. Private companies, trusts, real estate portfolios and intellectual property are difficult to value and often easy to restructure. While estimates suggest California's proposed one-off 5% billionaire tax could raise around $100 billion, the amount ultimately collected will depend on valuation, enforcement, avoidance and legal challenges.

A carefully designed tax on extreme wealth may still have a role, but the real measure of an effective tax is not symbolism. It is collection.”

To speak with Dr Miriam Marra, contact pr@henley.ac.uk.