California Wealth Tax Would Backfire, Cost State More Than It Raises, Report Finds

A proposed California wealth tax is drawing sharp criticism from policy analysts, who warn it would ultimately harm the state’s finances, accelerate the exodus of billionaires, and reduce future tax revenue. The concerns follow a Wall Street Journal op-ed highlighting a new study showing that $777 billion in wealth has already left the state. Analysts argue the proposed tax would, over time, cost California more in lost revenue than it would generate due to out-migration and slower economic growth.

Joel Pollak, opinion editor for the California Post, outlined the economic pitfalls in a recent interview, citing Europe’s failed experiments with similar taxes.

“France had a wealth tax on people with assets worth more than 1.3 million euros, in place since the 1980s,” Pollak said. “Emmanuel Macron canceled that tax in 2018.” The reason, he explained, is that the tax doesn’t just drive people away — it drives away their incomes and the incomes of those who work for them.

“If you add up the net present value of future income tax revenue and take it out, it outweighs what California hopes to get by taxing 5% of assets over billionaires,” Pollak said. “This really doesn’t work out. Even by proposing and putting it on the ballot, California has already lost a massive amount of wealth.”

Nine European nations that once imposed wealth taxes ultimately abandoned them after collecting less revenue than expected, not more.

High-Speed Rail Troubles

The state is also facing renewed calls to abandon or scale back its high-speed rail project. Originally approved by voters at a projected cost of $33 billion, estimates have now ballooned to roughly $230 billion. Pollak noted that the figure is likely on the low side, as it does not fully account for additional borrowing costs and interest.

“It will likely be even higher than that,” he said. “This has taken too long. It was supposed to be done in 2020. Now it may not be done until well into the 2030s, if at all.”

Pollak added that the rail line will not connect Los Angeles and San Francisco as originally promised. Instead, the initial operating segment would link rural Central Valley towns that already have regular Amtrak service and Interstate 5 access. “Nobody wants to ride it,” he said.

Homelessness Policy Critique

On California’s ongoing homelessness crisis, Pollak criticized the state’s “Housing First” approach. The state has spent roughly $24 billion on homelessness programs in recent years, yet homelessness rose significantly during that period.

“If you don’t treat underlying problems — addiction, mental illness — and continue to provide incentives for people to come to California, homeless populations and people addicted to drugs get drawn in,” he said, referencing reports of exploitation by some private operators.

Political Context

The comments come as the California gubernatorial race begins to take shape, with Democrats holding a massive partisan advantage. Under the state’s jungle primary system, Pollak noted that Republicans’ best hope is for both leading GOP candidates to advance to the general election. Otherwise, he warned, “the worst Democrat will beat the best Republican.”