Will the proposed California wealth tax take substantive effect?

What it takes to resolve this market?

Manifold Link This question will resolve YES if and only if the "2026 Billionaires Tax Act" gets on the ballot, passes, and is upheld by the courts (any legal challenges fail) such that the tax has actually taken effect, and significant (at least $1B) revenue has been collected, by December 31, 2027. If legal challenges succeed in striking down the act, or are unresolved by December 31, 2027 such that the tax is suspended and hasn't taken effect yet and its eventual effect is uncertain, the question resolves NO.

  1. gets on ballot (coin flip; slight lean towards passing)

  2. passes (coin flip; slight lean towards passing)

  3. upheld by courts (VERY LIKELY FAIL POINT)

    Background

    The “2026 Billionaire Tax Act”

    What are ballot Initiatives?

    In California, a ballot initiative is a way to propose a statute or constitutional amendment without the consent of the Governor or Legislature.

    Process

  4. Draft a proposed law

  5. Submit draft to Attorney General

  6. Collect enough signatures from voters (5% of votes cast for last Governor race)

  7. Verify Signatures

  8. Initiative is placed on ballot

  9. Simple majority needed to pass

    What is the ballot initiative about?

    The ballot initiative puts fourth the argument that access to food, healthcare and education is a necessary for a more prosperous California. The bill proposes that many social welfare programs are under duress while federal funding is cut and state appropriations are uncertain.

  • Medi-Cal is currently covering close to 15 million low-income households and is currently facing federal budget cuts.
  • “California public schools face unprecedented uncertainty caused in part by cuts to Medi-Cal and the Supplemental Nutrition Assistance Program (SNAP)”
  • 2026 federal budget cuts for public education are impacting California public schools

There are currently 200 billionaires in California with a combined wealth of around $2 Trillion. Billionaires pay less taxes than the average Californian and should pay more.

  • “These billionaires pay less than 1.5% of their total wealth in annual taxes, including federal, state, and local taxes, according to leading economic estimates-a small fraction of what ordinary Californians pay.”
  • “According to economic analysis and including all taxes at all levels of government, billionaires pay 24% of their income in taxes while the average taxpayer pays 30%.”

Wealth taxes are not new to California.

  • Property tax
  • Vehicle License Fee (property tax for vehicles)
  • estate tax (1 time wealth tax payed out when individual dies)

Purpose and Intent

  • “The purpose of the 2026 Billionaire Tax Act, referred to herein as the “Act,” is to protect access to high quality, equitable health care, and to support funding for kindergarten through grade fourteen public education and food assistance programs, by raising revenue from a one-time tax on billionaire wealth.”

  • “Notwithstanding any other provision of the Constitution, the Act provides for taxation on all forms of personal property and wealth, whether tangible or intangible, and allows for the classification of personal property and wealth for differential taxation or for exemption, for the purpose of imposing the one-time tax on the wealth of California billionaires. Personal property and wealth that is so taxed includes, but is not limited to, shares of capital stock, bonds or other evidences of indebtedness, and any legal or equitable interest therein.”

    Parties involved

  • California voters (very liberal)

  • California Billionaires (~200 people) (extremely agianst)

Prediction and Rational

No

There are too many points of failure and any one of them will mean will stop the proposal in its tracts.

  1. Need enough signatures to get on the ballot
  2. Need a simple majority yes votes on the initiative
  3. Can’t be held up in courts

I think it’s likely that the initiative gets enough signatures and ends up on the ballot. It’s a coin flip that it passes and becomes a statute. California is very liberal but the wealthy are fighting back pretty hard. It will almost certainly be help up in courts. There isn’t good precedent to tax unrealized capital gains on assets like stocks.