California’s billionaire tax will ‘kickstart a movement’ that spreads to more states, the federal government and other countries, Nobel laureates say

A ballot initiative that would impose a wealth tax on California’s billionaires could be the start of a global trend, according to six Nobel Prize-winning economists.

In a letter published on Saturday , they endorsed the state’s Proposition 40, which calls for residents worth more than $1 billion to pay a one-time tax equivalent to 5% of their assets.

The letter’s signatories, who have previously backed wealth taxes or higher income taxes on the ultra wealthy, include Daron Acemoglu, Abhijit Banerjee, Peter Diamond, Esther Duflo, Paul Krugman and Joseph Stiglitz.

“California is the right place to take this historic step,” they wrote.

“The explosive growth of the state’s billionaires over the past few decades has made it one of the most unequal places in America.” The economists estimated that California’s 250 billionaires are collectively worth $2.3 trillion, and the state income taxes they paid amounted to only 1.6% of their $1.4 trillion wealth gain from 2019 to 2025.

The number of billionaires could expand as SpaceX went public in June, with Anthropic planning its own IPO later this year and OpenAI potentially following next year.

While billionaires have “made important contributions,” the letter added, they have also been “amply rewarded” and have used loopholes to avoid taxes on capital returns, allowing their wealth to compound further.

Opponents of the tax have warned about the impact it could have on economic growth and startups.

They have also said the tax would force founders to sell big pieces of their companies.

Supporters point to the AI boom and say California’s ultra-rich would still be among the world’s wealthiest.

The union pushing Prop 40, the Service Employees International Union-United Healthcare Workers West, has said the wealth tax could raise $100 billion in revenue and help offset federal cuts to health spending.

The ballot measure has split the state’s political and business leaders.

Gov.

Gavin Newsom is against it, while U.S.