The tax system is made with large incentives for all business owners (from billionaires to small businesses to shareholders like retirees) to invest all profit into expanding their business.
If an owner takes out profit, they are punished with high income taxes. So they reinvest in their business, and this is what the government wants because it creates jobs, innovation, products and services, and tax income.
So they've been doing what they have been forced to do by the government. And as a consequence their companies are worth a lot.
Now the government wants to tax them on the company value?
Here's a better question: do we need them? I'll answer it for you: no. Let them leave. We still have the resources and the productivity. The fact that some asshat that doesn't do fuck all doesn't get to scrape profits for himself is just another advantage, aside from just not having these annoying billionaires around. People need to open their minds to the idea of us just taking their shit for ourselves.
I did notice that the writer says he was commissioned to cowrite a report that will be the basis for a lawsuit against the tax:
> Four Norwegian entrepreneurs have commissioned yours truly, Dr. Laura Melusine Baudenbacher and Professor Dr. Dr. Mads Andenas to write a comparative law study on the Norwegian wealth tax. This report will be the basis for a class action against the Norwegian state.
I assume the fact it’s submitted to a court will dissuade the authors from making totally unsubstantiated claims, but it still seems like there’s a strong financial incentive for them to reach negative conclusions about the tax.
This question is always strikes me as a false dichotomy, i.e. "we have to tax them, or else they leave". The issue is in my view is that constructing a system where the existence of such a rich class has become necessary to raise enough tax revenue. Organizing your country with more sustainable growth where income disparities aren't so high means you don't have this problem to this extent.
Taxing billionaires isn't "necessary to raise enough tax revenue." Total personal income in the U.S. is 26 trillion annually: https://tradingeconomics.com/united-states/personal-income. For the most part, that's real money that reflects goods and services in the real economy.
The increase in wealth of billionaires in 2025 was $1.5 trillion: https://americansfortaxfairness.org/billionaires-1-5-trillio... Most of that isn't even real money--it's people betting on AI. (As an aside, is the government going to give huge tax refunds when the AI bubble bursts and all that "wealth" disappears?)
If the U.S. just taxed people the way they do in Germany we could raise trillions in revenue without resorting to tricks like one-time wealth taxes. The focus is on billionaires because Americans want a German-style welfare state without German-style taxes on the middle and upper middle class.
Countries with low inequality tend to have strongly progressive taxation systems — Belgium, Sweden, Finland, etc. The billionaire class isn’t a necessity, it’s a failure of morality to overpower the affordances of hyper-growth capitalism.
If the OECD decided collectively to tax them there is no where to leave to. They decided on a minimum global cooperate tax, then they can do that same for those 1%.
Of course there are still countries where one could park their money outside the OECD members but many of those are not exactly a "safe" place for such assets.
Hasn't this already been tried numerous times in numerous countries already? Didn't France attempt it multiple times without success and actually lost tax revenue with the creation and enforcement of the tax? Not to mention the wealth flight?
In a healthy economy flow of money is like the flow of blood in the arteries. It is what stimulates the economic activity. You can't earn a dollar without someone spending that dollar. Spending = earning = economic activity.
People are always defending rich people (capital owners) that they invest their wealth. But actually if someone has a billion in the bank the fact that they have that billion is a proof that they didn't invest it. (If they did spend it or invest it the would not have it, now would they?)
A billion that circulates in the economy is much better than a billion that sits in someones bank account. Someone who spends 100% of their income is much better economic citizen than someone who doesn't.
Let's do a thought experiment and take it to the extreme: why not tax at the maximum?
We have already tried that in human history, it's called communism. No one is allowed to take private profit, everyone contributes to the best of their own ability, and everyone consumes according to their needs. It should be utopia because there is no wealth gap and wealth is maximally redistributed. Which is exactly what taxation is designed to do, only to the most extreme.
And I think everyone will agree with me that communism is a miserable failure. The rich may not leave physically but mentally they are checkout -- not willing to work as hard or take as much risk. So the answer is yes, if you tax them, most certainly they will leave physically for haven with lower tax, all things being equalled. Or leave mentally.
But not all things are equalled, so you can still tax them at a somewhat higher rate provided that you can provide other incentives. But still, too much tax will make it more likely for those who are able to to leave. This is almost an axiom.
How about instead of taxing them any differently than now, we prevent them from borrowing against their assets? Force them to sell their assets and pay capital gains.
This makes more sense. I hate when people talk about taxing the “net worth” of some rich guy when a good part of that net worth is locked into invested companies who are (hopefully) being taxed already.
The borrow scheme should be the thing being taxed really, because is a shadow realization of profit (they are borrowing against the current value of their assets)
The greater issue is we allow the richest to basically print money via their stock based compensation, which allows them to turn unrealized gains into loans backed by these stocks. They can spend that all they want to influence politics and wield illegitimate power. If they can spend this wealth, they can be taxed on it.
Make stock buybacks illegal again too. Overturn Citizen's United unless the head of the company can face charges for the actions of their company.
The concentration of wealth into the highest strata is a recipe for societal collapse seen multiple times in history.
This hints at a major misunderstanding that, frankly, drives me nuts. If people are getting paid in stock, they pay taxes on the value of the stock they are paid with.
Can they take a loan on existing stock? Yes. You can leverage assets and this, itself, leads to some pretty unfair things. No need to inflate it to the idea that "getting paid in stock means you don't pay taxes."
Long term: yes, especially if you combine really high taxes in the 40+% range with consistently rubbish public services
But the real question is not whether people will leave, the question is how many talented hard working people chose not to move to your country in the first place because your taxes were too high. It won't show up in any data, you'll just experience worse economic growth and have to tax everyone else more
The problem with this question is they never mentioned or specified who is "they".
Especially in UK where The Rich that dont belongs to UK in the first place will of course move and leave. Those who are born and raised are highly unlikely to move.
And perhaps most importantly the question completely ignore the real problem. There isn't a lack of Tax revenue, but the government incompetence to allocate and use it wisely. To raise tax is just saying what we are doing now is absolutely correct and we will continue to do so.
Mass. passed a high-income surtax a few years ago, with the result that we raied a lot of funds for schools & infrastructure, and we atill have plenty of rich people. Wealthy people hate paying taxes, but after paying, they're still pretty wealthy. And, some of them like living in a state with decent schools, health care, etc.
Wealth taxes are very, very different from higher income taxes.
People are mad about buy-borrow-die, so they’re proposing extraordinary new measures.
Personally, I’d just make capital gains taxes apply at the “borrow” stage to actually fix the problem. That would have a host of compliance issues but they’d be localized in the finance industry which already has an army of people figuring out compliance.
There needs to be less concentration of wealth and power for our societies to work. Taxing the ultra wealthy should be a nationwide bipartisan project. At the same time, California isn’t the right place for this experiment because it will not solve the fundamentals problem of their government spending and wastefulness.
They probably won‘t. I recently watched a talk (in german) with Julia Friedrichs, who wrote a book about millionaires and billionaires and did many interviews with them:
In her research she found that many of the ultra-rich people actually have deep/patriotic/nostalgic ties to their home/community and want to invest there. They often use certain tax-evasion measures because everybody else does and she argued that those few ultra-rich people who really just care about minimizing their taxes have already moved everything abroad.
This made me research how much taxes would a wealthy californian pay assuming:
- 2.5M worth of real estate bought recently
- 1M of job income
- 1M selling shares that 10xed (some stock option idk)
- driving a 150k $ car
- spending 150k $ over the years in taxable goods
It came around 840'000 $ or around 40.1 %.
I wouldn't say it's that bad, this even includes sales taxes (probably the fairest of all taxes).
With even basic tax optimization (401k, federal deductions) you get that number down to 780'000 $, with something a bit more sophisticated depending on circumstances you can get it easily lower than 600k or 32% ish.
The biggest problem is that people above that tier end up effectively paying less sometimes even in absolute terms just by borrowing against their equity and not triggering taxable events.
Honestly taxes are complicated to implement, I'm not sure how can you implement a progressive yet fair system without loopholes and without severely degrading services (roads, infrastructure, education, healthcare, military, etc, etc).
And every time you decide to cut on services, you are just moving money elsewhere: more inequality -> more social tensions and criminality, you just end up paying way more to live in a safe place and pay for private and public security and prisons.
Sales tax is one of the most UNFAIR, being a flat tax, it affects people in indirect proportion to their wealth (poorest hit hardest, proportionately).
I agree with your overall point. But I find it odd that you consider sales taxes to be the "fairest". Similarly, I find it odd that you put "progressive" taxes in some tension with "fair" taxes. Folks in the highest income range arguably benefit the most from govt services (e.g., infrastructure, defense, R&D, rule of law). They also have a much higher ability to pay well beyond basic survival needs. And, they can reduce sales tax burden by saving versus consuming, a choice that is not available to lower-income.
Even Georgism style taxes will face the problem that if the tax is high enough, it will be worth hiring some really smart person to figure out how to work around it.
Of course, you're also going to have to face the problem that representative democracy includes the ability to buy loopholes.
And then, there are unintended consequences because representatives aren't necessarily the most financially savvy. I'm thinking about the 401k program that disproportionately advantages high income people when it was touted as a savings route for middle class people.
> And every time you decide to cut on services, you are just moving money elsewhere: more inequality -> more social tensions and criminality, you just end up paying way more to live in a safe place and pay for private and public security and prisons.
There's no reason to think that the amount of taxpayer-funded services in a political jurisdiction has inversely proportional relationship with amount of crime that that happens there (nor any particular relationship with what kinds of crime, how serious the specific crimes are, and so on). Same thing with social tensions - social tension are caused by a lot of things, many of which aren't particularly related to the raw amount of taxpayer-funded services that exist. Would a more redistributive welfare state have made the partition of India between (mostly) Hindus and (mostly) Muslims less likely, for instance?
Selecting the precise threshold where a marginal point kicks in is pretty funny, though I'm sure you didn't intend it. Above a million there's also the MHSA tax. Marginal at over a million is 50% or more unless you optimize.
I also like the idea of sales taxes over income and especially wealth taxes for a number of reasons.
1. It limits the opportunities for the government to use force on the general population. Today, if you do not file your annual taxes, men with guns come and put you in jail. A sales tax does not require this level of enforcement to be inflicted on the average citizen.
2. It's voluntary to a degree. Today if you don't like what the government is doing and want boycott paying taxes you cannot practically do so because of point 1 above. With a sales tax you can decide to defer unnecessary spending as a form of protest.
3. In theory it's vastly simpler to reason about and plan for. The myriad of tax advantaged accounts that have proliferated over the years in the US is daunting: IRAs, 401k/403b, 529s, FSAs, HSAs, Trump Accounts, Roth variants. We ask citizens to best guess how to allocate investments between these vehicles for goals decades in the future. If you need emergency access you're often looking at paying penalties. Not to mention the poor user experience baked into many of the designs. 401ks put the burden on your employer to restrict your investment options to their curated choices and their chosen plan administrator. You have to leave your job and roll it into an IRA to finally have the freedom to pick your own investments and who you have the account with. FSAs have the annoying use-it-or-lose-it rules. 529s are bizarrely state sponsored but you can choose a plan from any state. Like your state's plan but want to have the account at your broker? Too bad, you have to use the administrator your state chooses.
4. It's widely understood that if want less of something you should tax it. By taxing income and wealth it discourages work and saving. A sales tax discourages consumption instead, which encourages saving and is also pro environmental.
5. Changing asset allocation is free. Today, changing investments in a taxable account, where there are gains, triggers a taxable event. This discourages the movement of that capital to other investments.
6. In theory it's harder to dodge taxes as the simpler system has less loopholes.
7. On average, people with more wealth should have more expensive lifestyles which translates to them paying higher taxes.
I understand the arguments that sales taxes are regressive, let rich people dodge taxes by living frugally, etc. I accept all that may be true and I'm ok with it. Many seem fixated on using the tax code as a mechanism to level inequalities, as if that were its primary function, and a sales tax doesn't advance that goal enough for them. I think I can accept that some people are going to be vastly wealthier than me and are going most likely live a much easier life because of it; much like I can accept that some people are going to much prettier than me, taller than me, less genetically disposed to certain medical conditions, have been born to better families/circumstances and those things can all provide significant advantages in one's life.
The overall idea with VAT is that you are taxed when you buy things
The reversed-VAT is the idea that you are taxed when you earn money (not "income" as in "salaries": every time some wealth are earned somehow)
Fixed rate, money's origin is of no concern, nor is money's usage
Say, you have a 40% tax on everything (using the same rate is important):
- your company sold random stuff: you keep 60%
- you earned money from interest / investment / etc: you keep 60%
- income from your job: you keep 60%
- a gift from your uncle: you keep 60%
- inheritance: you keep 60%
- exchange some money between your companies: you keep 60%
- you borrow something: you keep 100% (it will fall back to 40% tax if that borrow is transformed into a gift)
- you earned something of value (non-money gift), in one form or another: you have to pay 40% of its value
The root of all evil is the thinking that tax are made to make "a better world", that it is a tool a (social) justice or whatever
But it must be the same for everybody. Because only then it can be simple. And the more complex it is, the more loophole you have ("whack a mole" style as we have today)
Now, one person could keep all his money. Is it an issue ? No ! First, because he would have been taxed to 40% already. And then, because everybody dies someday. And that day, 40% of this person's riches will be retrieved: which would, again, be nice to the society as a whole: it would damage multi-generational wealth (while not void it).
I don’t want to believe for a second anyone would walk away from Silicon Valley because of being taxed. The impact on the calculus of reward simply doesn’t make sense. On the other hand I am always surprised by people and the strange things we do.
Most people, by count, of course would not leave because of the wealth tax currently being proposed in California as it targets just a tiny segment of the population - current estimates are that less than 250 Californians, or less than 0.001%, would pay the currently proposed statewide wealth tax. The other 99.999+% would not (yet) have to pay a wealth tax. However, the <0.001% that (esp. the wealthiest among them) who would pay the wealth tax would be motivated to move.
Unfortunately for California about 40% of the total state income tax collected (which accounts for about 65% of the state general fund) is paid by the top 1% of income earners -- which includes those 0.001% who will be motivated to move by a wealth tax (or even merely the threat of one).
The <0.001% number appears to be based on population _before_ several billionaires moved out before Jan 1, 2026 - likely at least partially motivated by the small, but real, risk of the "billionaire's tax" qualifying for the ballot and passing (and that proposed tax is only "temporary" and is only a total of 5% over three years so isn't nearly as alarming to the wealthy as a "permanent" tax would be). If it looks like this measure will end up on the ballot and have a chance of passing, expect many more to leave. This will, even if it does not ultimately pass, erode the income tax base.
California has rebelled against wealth taxes in the past - most notably by the passage of Prop 13 almost 50 years ago (a property tax is a wealth tax). They are not popular except when the hit "the other guy" -- but "the other guy" is the one most able to avoid the tax.
Wealthy people are typically very flexible as to where they live. They often already own multiple homes and often spend a lot of time out of the state they "live" in. When they move, they are not packing and labeling their own boxes or are likely even present on "moving day". They also are more likely to set up HQ and shop near where they spend a lot of their time. Even if they have family in California, they can still get together with them for Thanksgiving dinner -- either by flying the family to them on their private and chartered jets or by themselves flying to California for the weekend on one of their jets. They can conduct most business very efficiently remotely and often do so now to a significant extent.
It only takes a few to leave to tank the California budget - likely causing the progressive income and wealth taxes to reach deeper and deeper into the upper middle classes as California desperately tries to balance their budget without cutting yet more programs.
Other states are loving this though and will cut tax deals to attract these very billionaires that California are encouraging to leave.
People walk when they don’t make money. You don’t look at Silicon Valley for these types of things. You look at a deprived forgotten town that could had survived were they not squeezed so much
The article asserts that, since this is a one-time tax, billionaires will have no incentive to leave: "The tax’s designers, however, think they’ve come up with a clever solution to capital flight: a one-off tax that is retroactive, based on a billionaire’s residency status on January 1, 2026. In other words, unless they’ve already fled the state, billionaires won’t be able to move to avoid paying the tax. 'At this point, there’s no financial incentive to leave California,' Zucman said. 'You’re going to pay the same amount either way.'"
That misses the point. A one-time wealth tax to plug holes in the state's finances reeks of short-termism and desperation, like Chicago selling off its parking meters. Even if I wasn't affected by the tax, I'd be alarmed at the implication. It would have been much better to implement a well thought out and orderly recurring tax on capital gains or whatever.
State taxes can be dodged by moving. Federal (US) taxes are supposed to be filed each year no matter where US-ians live. They can work games to not pay the US but that either requires "no formal income" or living where taxes are higher than the US.
Or, I guess, just don't deal with the US and either don't go there, or hope to not get caught.
63 comments
[ 3.1 ms ] story [ 75.9 ms ] threadIf an owner takes out profit, they are punished with high income taxes. So they reinvest in their business, and this is what the government wants because it creates jobs, innovation, products and services, and tax income.
So they've been doing what they have been forced to do by the government. And as a consequence their companies are worth a lot.
Now the government wants to tax them on the company value?
Case study: New York City, United Kingdom, France, Germany, Denmark…
The list goes on until they choose; Texas, Florida, Singapore and Dubai.
> Four Norwegian entrepreneurs have commissioned yours truly, Dr. Laura Melusine Baudenbacher and Professor Dr. Dr. Mads Andenas to write a comparative law study on the Norwegian wealth tax. This report will be the basis for a class action against the Norwegian state.
I assume the fact it’s submitted to a court will dissuade the authors from making totally unsubstantiated claims, but it still seems like there’s a strong financial incentive for them to reach negative conclusions about the tax.
The actual question is: "If we tax tax them, will they leave? (losing the planned tax revenue/backfiring)"
It is pretty easy to avoid state taxes - just move to a different state.
The increase in wealth of billionaires in 2025 was $1.5 trillion: https://americansfortaxfairness.org/billionaires-1-5-trillio... Most of that isn't even real money--it's people betting on AI. (As an aside, is the government going to give huge tax refunds when the AI bubble bursts and all that "wealth" disappears?)
If the U.S. just taxed people the way they do in Germany we could raise trillions in revenue without resorting to tricks like one-time wealth taxes. The focus is on billionaires because Americans want a German-style welfare state without German-style taxes on the middle and upper middle class.
did the people ever leave ? NO
For example GWB "lived" in texas the whole time he worked in washington.
Of course there are still countries where one could park their money outside the OECD members but many of those are not exactly a "safe" place for such assets.
But universal is what we need as humanity.
The will seems to be building up, even in the UK (Polanski) and US (Mamdani, AOC, Sanders).
I'm betting that the success will be replicated in other countries soon and after that its only a matter of time for this to go global.
But this will be interesting show.
Hasn't this already been tried numerous times in numerous countries already? Didn't France attempt it multiple times without success and actually lost tax revenue with the creation and enforcement of the tax? Not to mention the wealth flight?
People are always defending rich people (capital owners) that they invest their wealth. But actually if someone has a billion in the bank the fact that they have that billion is a proof that they didn't invest it. (If they did spend it or invest it the would not have it, now would they?)
A billion that circulates in the economy is much better than a billion that sits in someones bank account. Someone who spends 100% of their income is much better economic citizen than someone who doesn't.
We have already tried that in human history, it's called communism. No one is allowed to take private profit, everyone contributes to the best of their own ability, and everyone consumes according to their needs. It should be utopia because there is no wealth gap and wealth is maximally redistributed. Which is exactly what taxation is designed to do, only to the most extreme.
And I think everyone will agree with me that communism is a miserable failure. The rich may not leave physically but mentally they are checkout -- not willing to work as hard or take as much risk. So the answer is yes, if you tax them, most certainly they will leave physically for haven with lower tax, all things being equalled. Or leave mentally.
But not all things are equalled, so you can still tax them at a somewhat higher rate provided that you can provide other incentives. But still, too much tax will make it more likely for those who are able to to leave. This is almost an axiom.
Make stock buybacks illegal again too. Overturn Citizen's United unless the head of the company can face charges for the actions of their company.
The concentration of wealth into the highest strata is a recipe for societal collapse seen multiple times in history.
Can they take a loan on existing stock? Yes. You can leverage assets and this, itself, leads to some pretty unfair things. No need to inflate it to the idea that "getting paid in stock means you don't pay taxes."
Long term: yes, especially if you combine really high taxes in the 40+% range with consistently rubbish public services
But the real question is not whether people will leave, the question is how many talented hard working people chose not to move to your country in the first place because your taxes were too high. It won't show up in any data, you'll just experience worse economic growth and have to tax everyone else more
Especially in UK where The Rich that dont belongs to UK in the first place will of course move and leave. Those who are born and raised are highly unlikely to move.
And perhaps most importantly the question completely ignore the real problem. There isn't a lack of Tax revenue, but the government incompetence to allocate and use it wisely. To raise tax is just saying what we are doing now is absolutely correct and we will continue to do so.
https://www.peoplespolicyproject.org/2025/11/17/do-millionai...
People are mad about buy-borrow-die, so they’re proposing extraordinary new measures.
Personally, I’d just make capital gains taxes apply at the “borrow” stage to actually fix the problem. That would have a host of compliance issues but they’d be localized in the finance industry which already has an army of people figuring out compliance.
https://www.youtube.com/live/4HpJKPywXqY?si=bb-p558jl_otP25I
In her research she found that many of the ultra-rich people actually have deep/patriotic/nostalgic ties to their home/community and want to invest there. They often use certain tax-evasion measures because everybody else does and she argued that those few ultra-rich people who really just care about minimizing their taxes have already moved everything abroad.
- 2.5M worth of real estate bought recently
- 1M of job income
- 1M selling shares that 10xed (some stock option idk)
- driving a 150k $ car
- spending 150k $ over the years in taxable goods
It came around 840'000 $ or around 40.1 %.
I wouldn't say it's that bad, this even includes sales taxes (probably the fairest of all taxes).
With even basic tax optimization (401k, federal deductions) you get that number down to 780'000 $, with something a bit more sophisticated depending on circumstances you can get it easily lower than 600k or 32% ish.
The biggest problem is that people above that tier end up effectively paying less sometimes even in absolute terms just by borrowing against their equity and not triggering taxable events.
Honestly taxes are complicated to implement, I'm not sure how can you implement a progressive yet fair system without loopholes and without severely degrading services (roads, infrastructure, education, healthcare, military, etc, etc).
And every time you decide to cut on services, you are just moving money elsewhere: more inequality -> more social tensions and criminality, you just end up paying way more to live in a safe place and pay for private and public security and prisons.
It's really difficult.
Georgism, a single tax on the unimproved value of land
Of course, you're also going to have to face the problem that representative democracy includes the ability to buy loopholes.
And then, there are unintended consequences because representatives aren't necessarily the most financially savvy. I'm thinking about the 401k program that disproportionately advantages high income people when it was touted as a savings route for middle class people.
There's no reason to think that the amount of taxpayer-funded services in a political jurisdiction has inversely proportional relationship with amount of crime that that happens there (nor any particular relationship with what kinds of crime, how serious the specific crimes are, and so on). Same thing with social tensions - social tension are caused by a lot of things, many of which aren't particularly related to the raw amount of taxpayer-funded services that exist. Would a more redistributive welfare state have made the partition of India between (mostly) Hindus and (mostly) Muslims less likely, for instance?
1. It limits the opportunities for the government to use force on the general population. Today, if you do not file your annual taxes, men with guns come and put you in jail. A sales tax does not require this level of enforcement to be inflicted on the average citizen.
2. It's voluntary to a degree. Today if you don't like what the government is doing and want boycott paying taxes you cannot practically do so because of point 1 above. With a sales tax you can decide to defer unnecessary spending as a form of protest.
3. In theory it's vastly simpler to reason about and plan for. The myriad of tax advantaged accounts that have proliferated over the years in the US is daunting: IRAs, 401k/403b, 529s, FSAs, HSAs, Trump Accounts, Roth variants. We ask citizens to best guess how to allocate investments between these vehicles for goals decades in the future. If you need emergency access you're often looking at paying penalties. Not to mention the poor user experience baked into many of the designs. 401ks put the burden on your employer to restrict your investment options to their curated choices and their chosen plan administrator. You have to leave your job and roll it into an IRA to finally have the freedom to pick your own investments and who you have the account with. FSAs have the annoying use-it-or-lose-it rules. 529s are bizarrely state sponsored but you can choose a plan from any state. Like your state's plan but want to have the account at your broker? Too bad, you have to use the administrator your state chooses.
4. It's widely understood that if want less of something you should tax it. By taxing income and wealth it discourages work and saving. A sales tax discourages consumption instead, which encourages saving and is also pro environmental.
5. Changing asset allocation is free. Today, changing investments in a taxable account, where there are gains, triggers a taxable event. This discourages the movement of that capital to other investments.
6. In theory it's harder to dodge taxes as the simpler system has less loopholes.
7. On average, people with more wealth should have more expensive lifestyles which translates to them paying higher taxes.
I understand the arguments that sales taxes are regressive, let rich people dodge taxes by living frugally, etc. I accept all that may be true and I'm ok with it. Many seem fixated on using the tax code as a mechanism to level inequalities, as if that were its primary function, and a sales tax doesn't advance that goal enough for them. I think I can accept that some people are going to be vastly wealthier than me and are going most likely live a much easier life because of it; much like I can accept that some people are going to much prettier than me, taller than me, less genetically disposed to certain medical conditions, have been born to better families/circumstances and those things can all provide significant advantages in one's life.
I think reversed-VAT is the good way to do
The overall idea with VAT is that you are taxed when you buy things
The reversed-VAT is the idea that you are taxed when you earn money (not "income" as in "salaries": every time some wealth are earned somehow)
Fixed rate, money's origin is of no concern, nor is money's usage
Say, you have a 40% tax on everything (using the same rate is important): - your company sold random stuff: you keep 60% - you earned money from interest / investment / etc: you keep 60% - income from your job: you keep 60% - a gift from your uncle: you keep 60% - inheritance: you keep 60% - exchange some money between your companies: you keep 60% - you borrow something: you keep 100% (it will fall back to 40% tax if that borrow is transformed into a gift) - you earned something of value (non-money gift), in one form or another: you have to pay 40% of its value
The root of all evil is the thinking that tax are made to make "a better world", that it is a tool a (social) justice or whatever
But it must be the same for everybody. Because only then it can be simple. And the more complex it is, the more loophole you have ("whack a mole" style as we have today)
Now, one person could keep all his money. Is it an issue ? No ! First, because he would have been taxed to 40% already. And then, because everybody dies someday. And that day, 40% of this person's riches will be retrieved: which would, again, be nice to the society as a whole: it would damage multi-generational wealth (while not void it).
Unfortunately for California about 40% of the total state income tax collected (which accounts for about 65% of the state general fund) is paid by the top 1% of income earners -- which includes those 0.001% who will be motivated to move by a wealth tax (or even merely the threat of one).
The <0.001% number appears to be based on population _before_ several billionaires moved out before Jan 1, 2026 - likely at least partially motivated by the small, but real, risk of the "billionaire's tax" qualifying for the ballot and passing (and that proposed tax is only "temporary" and is only a total of 5% over three years so isn't nearly as alarming to the wealthy as a "permanent" tax would be). If it looks like this measure will end up on the ballot and have a chance of passing, expect many more to leave. This will, even if it does not ultimately pass, erode the income tax base.
California has rebelled against wealth taxes in the past - most notably by the passage of Prop 13 almost 50 years ago (a property tax is a wealth tax). They are not popular except when the hit "the other guy" -- but "the other guy" is the one most able to avoid the tax.
Wealthy people are typically very flexible as to where they live. They often already own multiple homes and often spend a lot of time out of the state they "live" in. When they move, they are not packing and labeling their own boxes or are likely even present on "moving day". They also are more likely to set up HQ and shop near where they spend a lot of their time. Even if they have family in California, they can still get together with them for Thanksgiving dinner -- either by flying the family to them on their private and chartered jets or by themselves flying to California for the weekend on one of their jets. They can conduct most business very efficiently remotely and often do so now to a significant extent.
It only takes a few to leave to tank the California budget - likely causing the progressive income and wealth taxes to reach deeper and deeper into the upper middle classes as California desperately tries to balance their budget without cutting yet more programs.
Other states are loving this though and will cut tax deals to attract these very billionaires that California are encouraging to leave.
That misses the point. A one-time wealth tax to plug holes in the state's finances reeks of short-termism and desperation, like Chicago selling off its parking meters. Even if I wasn't affected by the tax, I'd be alarmed at the implication. It would have been much better to implement a well thought out and orderly recurring tax on capital gains or whatever.
Or, I guess, just don't deal with the US and either don't go there, or hope to not get caught.