One Model Projects $38.9 Billion Net Present Value Loss if Departures Persist

California’s proposed one-time billionaire tax could raise $28 billion to $36 billion, while one model projects a $38.9 billion net present value loss if departures permanently reduce state income-tax revenue.

That result depends on income-tax collections from departing taxpayers staying lower indefinitely. The model weighs the one-time tax proceeds against the value of those future revenue losses. The $38.9 billion figure is a projection, not a loss already recorded in the state budget.

The model estimates that publicly confirmed moves could reduce the proposed tax base by nearly 30%, though an announced move alone does not establish whether a taxpayer met the Jan. 1, 2026, residency test. It also discounts potential proceeds for the chance that courts invalidate the tax. Of 100,000 model runs using varying revenue and discount-rate assumptions, 85% ended with a negative net present value.

The levy could bring in tens of billions of dollars over several years, while annual income-tax revenue from billionaires could fall by less than $1 billion. Another estimate puts the tax proceeds near $100 billion. In a scenario where every billionaire leaves, that analysis estimates the income-tax losses would take 25 years to equal the tax revenue.

The competing estimates reflect different assumptions about how long migration-related losses would last. One model carries those losses forward permanently. The other argues that a response lasting beyond a one-time tax is unlikely unless taxpayers expect another wealth tax.

Proposition 40 would impose a one-time 5% tax on the net worth of billionaires who were California residents on Jan. 1, 2026. Payments would be due in 2027, with an option to pay over five years at additional cost. The proposal directs 90% of the revenue to health care, with the remainder going to food assistance or education-related programs.

Billionaires have directed $300 million toward a campaign against Proposition 40. California voters are scheduled to decide on the measure Nov. 3.