Stanford study warns California billionaire tax may reduce state revenue

A Stanford University analysis cautions that California's proposed billionaire tax could have unintended financial consequences, CBS News reported.

The tax, set for a vote next month, aims to impose a one-time 5% tax on billionaire wealth to fund the state's healthcare system. However, Stanford economists Benjamin Jaros and Joshua Rauh found that several billionaires have already moved out of California, removing about 30% of the state's billionaire wealth from taxation potential.

Notable billionaires who left include venture capitalist Peter Thiel and Google co-founders Larry Page and Sergey Brin. The economists estimate that the tax may generate around $30 billion, significantly less than the $100 billion projected by supporters of the measure.

Moreover, the study warns that income tax losses from billionaire departures could range from $1 billion to $3.5 billion annually, potentially offsetting the tax revenue gains. Over time, these losses could exceed the wealth tax proceeds by approximately $39 billion in present value.

The economists concluded that the tax might not achieve its primary goal of raising revenue due to behavioral responses before the vote. The healthcare worker union SEIU-UHW, which introduced the measure, did not immediately comment on the findings.