Economists Try to Save Californians from Themselves

Much of the damage of Proposition 40, a ballot measure to impose a 5 percent wealth tax on California billionaires’ assets, has already been done. At least seven billionaires have fled the state preemptively, taking with them $536 billion in wealth (or nearly a third of the tax’s supposed base) and many billions of dollars in annual income. Consequently, researchers at the Stanford-based Hoover Institution estimate that the “billionaire tax,” meant to raise $100 billion, will end up losing the state money.

Yet Californians still have a chance to partially salvage the situation by voting down the wealth tax on Tuesday, showing the state’s remaining entrepreneurs and investors that blatant confiscation does not enjoy majority support and shielding their incentives to keep building wealth. A large coalition of economists is now urging voters to slam the brakes.