The Center for Land Economics complete study can be established here; our op-ed on the identical disagreement ran in the San Francisco Chronicle yesterday.
Last week California certified a Billionaire Wealth Tax for the November ballot: a 5 percent one-time levy on the state’s billionaires, paid out complete five years, to lift concerning $20 milliard a twelvemonth for health care, food aid, and schools following national cuts. We comprehend the impulse. The province has a income hole, and billionaires can oversee to assistance inhabit it.
But the tax volition neglect at the item it’s for, and it volition neglect for a uncomplicated reason: billionaires, dissimilar land, have feet.
We fair spent months construction the empirical case, calculating the total of California’s district values, in a new study from the Center for Land Economics. The abbreviated version: district is among the biggest pools of prosperity there is, California has additional of it than nearly item else, and it cannot depart the state.
We estimated the total value of California’s land, summing it up parcel by parcel: concerning $8.14 trillion. We checked that fig two additional ways — against national housing-finance data and against time-trended revenue — and all three methods district in the identical range. It is, as far as we know, the archetypal dependable bottom-up evaluation of what California’s district is really worth.
That figure is approximately eight times the billionaire prosperity the province can motionless realistically tax. Los Angeles County’s district solitary is value additional than the complete billionaire basis the prosperity tax is chasing. The Bay Area’s is near behind.
And district is the rare tax basis that fair sits there. A billionaire can move to Austin. While their portfolio can move in an afternoon, their district cannot.
The prosperity tax’s own math assumes a $2 trillion base, which is a nearly 2x overestimate because of prosperity flight.
Six California billionaires — Larry Page, Sergey Brin, Peter Thiel, Don Hankey, Travis Kalanick, and Steven Spielberg, value approximately $540 milliard blended — had already moved their tax residency out of province before the measure’s January 1, 2026 cutoff. Mark Zuckerberg (about $220 billion) followed in first 2026 and volition nearly certainly combat the retroactive attain in court. Add a approximately $200 milliard overestimate that another economists have flagged in the proposal’s own model, and nearly fractional the assumed basis is gone.
To motionless lift its $20 milliard against what’s left, the charge would have to ascend from 1 percent toward 1.6 or 1.9 percent depending if Zuckerberg prevails in court, which lone gives the billionaires who stayed one additional logic to prosecute their neighbors out. This is the trap alongside taxing a small figure of mobile people: lift the charge to chase the ones who left, and you shove out the ones who remained.
Here is the difference that should reframe the entire debate.
A district value tax of fair 0.25 percent would lift the identical $20 milliard a twelvemonth the prosperity tax promises on a basis eight times larger, that grows alongside California’s economics alternatively of fleeing it, and that cannot move. (Go bigger and the math motionless holds: a charge of concerning 1 percent would shield California’s complete $87 milliard health and individual services budget, in perpetuity.)
A district value tax is fair an average asset tax alongside one change: it falls solely on the value of the district and not the buildings on it. The district value tax can’t be dodged by leaving nor can it be passed on to renters. Meanwhile, it captures the windfall the community itself creates: whenever the province builds a transit line, the surrounding district gets additional valuable, and the tax returns part of that to the group who paid for it.
Because district value is wildly concentrated, the burden lands hardest on the premier coastal many and downtown blocks owned by those alongside the most, and barely touches a operating family’s home in the Central Valley. It reaches the affluent without having to chase them.
None of this is really concerning billionaires; California reaches for exotic taxes since its normal one has been damaged since 1978.
Proposition 13 capped asset taxes and froze assessed values until a asset sells, so a long-tenured owner can pay a small fraction of what the young family next entrance owes on an identical house. We evaluation California now assesses asset at location between 44 and 60 percent of what it’s really worth. In another words, the province has quietly chosen not to collect on approximately fractional its own real-estate base. As asset income fell, earnings taxes rosy to inhabit the gap, which is how California ended up alongside the highest earnings tax charge in the nation and a income basis that walks out the entrance whenever it’s squeezed. The prosperity tax is the most desperate compression yet, and it does nothing to repair the basis underneath.
The identical error is being made everywhere. Land value tax is concerning as near as economics gets to a liberated lunch, yet from Florida to California, they are ignoring it.
Florida is trying to abolish its asset tax; critics evaluation the misplaced income would have to be made up by approximately doubling the province revenue tax, selling the one tax that doesn’t distort the economics for one that taxes all acquisition operating families make. California is going the another way, layering a brand-new tax on mobile billionaire prosperity on top of an already-broken asset tax. Both should appearance alternatively to the tax basis sitting correct under their feet.
The prosperity California can really tax is the dirt itself: stable, enormous, made precious by all of us, and incapable of moving to Miami.
Greg Miller and Lars Doucet are co-founders of the Center for Land Economics.
