California’s Billionaire Tax Is A Trojan Horse… Not A Solution

Key Takeaways:

• California has proposed a one-time 5 percent tax on net worth exceeding $1 billion.
• The plan uses “total assessed wealth,” raising questions about how such audits and declarations will be enforced.
• Federal politicians have floated wealth taxes for those worth $100 million, signaling broader potential ramifications.
• There is concern that once imposed, the threshold could drop to include far more people over time.
• Critics argue that California already burdens business owners with high taxes and extensive regulatory compliance.

California’s Wealth Tax Debate

California lawmakers have introduced a one-time 5 percent tax on individuals whose net worth exceeds $1 billion. Proponents suggest it will generate funds that could be used for social programs, but many remain wary. According to the proposal, this tax would hinge on “total assessed wealth,” meaning assets would be declared by the owner, verified by the state, and subject to audit.

The Mechanism and Broader Concerns

Most taxes in the United States target either income or consumption—what you earn, spend, or sell. By contrast, this proposed measure taxes accumulation, prompting concerns that it doesn’t consider actual cash flow or liquidity. Critics also reference federal proposals to impose similar taxes on those worth $100 million, signaling the possibility that a “billionaire” threshold might shift downward over time.

Strain on Business Owners

The original author, who built restaurants in California, underscores that even before this proposal, entrepreneurs already faced a maze of permits, inspection fees, and licensing requirements. These complexities contribute to what some see as a burdensome business environment. The author quips that in California, “compliance” can feel like a full-time job, and adding yet another tax—especially one based on total net worth—could further encourage people and businesses to leave the state.

Potential Constitutional Questions

One argument raised is the potential resemblance to a “bill of attainder”—a term from constitutional law preventing laws that single out specific individuals or a small group without due process. Though wealth taxes are not criminal punishments, critics warn that applying a massive tax to a narrow group could raise fairness issues, especially if no court proceeding is involved.

The Broader Implications

Opponents of the tax point out that once the government gains the authority to tax total assessed wealth, there is no guarantee thresholds will remain fixed at the billionaire level. With the cost of living in California driving up property values, even middle-income families who own a house valued at $1 million could eventually find themselves within reach of a future wealth tax. This “slippery slope” forms the crux of the Trojan horse argument: if the state can tax net worth at $1 billion, they argue, it’s only a matter of time before the numbers shift.

A Cautionary Perspective

Citing personal libertarian views, the author expresses firm opposition to expanding the government’s ability to define and tax total wealth. There is little faith that once introduced, the tax would remain limited to billionaires. Instead, the concern is that the state’s sweeping enforcement powers would eventually be felt by ordinary homeowners and small-business owners alike.

By introducing this measure, California has reignited the debate over whether targeted taxes truly stay targeted—or if they mark the beginning of broader taxation that could transform the fiscal landscape for all.