Essay by Eric Worrall
Soaring energy bills, a political crisis, and an insane plan to expropriate wealth creators who drive the Californian Economy.
The tax;
Explaining California’s billionaire tax: The proposals, the backlash and the exodus
By Queenie Wong
Staff Writer Follow
Jan. 19, 2026 9:59 AM PTThe battle over a new tax on California’s billionaires is set to heat up in the coming months as citizens spar over whether the state should squeeze its ultra-rich to better serve its ordinary residents.
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Under the Billionaire Tax Act, Californians worth more than $1 billion would pay a one-time 5% tax on their total wealth. The Service Employees International Union-United Healthcare Workers West, the union behind the act, said the measure would raise much-needed money for healthcare, education and food assistance programs.
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Which billionaires are already distancing themselves from California?
Google co-founders Larry Page and Sergey Brin
Google is still headquartered in California, but December filings to the California Secretary of State show other companies tied to Page and Brin recently converted out of the state.
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Palantir co-founder Peter Thiel
…Oracle co-founder and Chief Technology Officer Larry Ellison
…DoorDash co-founder and Chief Technology Officer Andy Fang
…Palo Alto-based venture capitalist Chamath Palihapitiya estimates that the lost revenues from the billionaires who have already left the state would lead to more losses in tax revenues than gained by the new tax.
Read more: https://www.latimes.com/business/story/2026-01-19/explaining-californias-billionaire-tax-proposals-backlash-exodus
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Why does California need so much money in a hurry? The following might offer an explanation;
Governor Newsom signs historic package of bipartisan legislation saving billions on electric bills, stabilizing gas market and cutting pollution
Sep 19, 2025
New laws will provide California families up to $60 billion in electricity bill refunds
What you need to know: The Governor joined legislative leaders and advocates and signed major legislation that promises to bring down electricity costs, stabilize the petroleum market and slash air pollution.
SAN FRANCISCO — Governor Gavin Newsom today signed sweeping bipartisan reforms to California’s world-leading climate policy that promise to save Californians billions of dollars on energy costs. The Governor’s action comes as the Trump administration continues its efforts to gut decades-old, bipartisan American clean air protections and derail critical climate progress.
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“I just signed into law the biggest electricity bill refunds in a decade — up to $60 billion to help bring down costs for California families. Millions of Californians will soon start saving billions on their energy costs, and the savings don’t stop there – we’re stabilizing the state’s gasoline supply to avert severe price spikes at the pump and we’re making it easier to build the abundant clean energy we need to keep bills lower. On top of all that, we’re doubling down on our best tool to combat Trump’s assaults on clean air – Cap-and-Invest – by making polluters pay for projects that support our most impacted communities.”
Read more: https://www.gov.ca.gov/2025/09/19/governor-newsom-signs-historic-package-of-bipartisan-legislation-saving-billions-on-electric-bills-stabilizing-gas-market-and-cutting-pollution/
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Why are electricity prices becoming such a political flashpoint?
Why California’s Electricity Bills Keep Rising: The Hidden Cost of Rooftop Solar Subsidies
Aug. 12, 2025 6:35 AM PT
Californians pay the second-highest electricity rates in the nation. A growing body of evidence has concluded that the No. 1 driver of higher bills is a decades-old policy that forces customers to pay for their neighbors’ rooftop solar systems.
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According to the California Public Advocates Office, this cost shift was $8.5 billion in 2024 alone, up from $3.4 billion just three years ago.
Households without solar now pay as much as 27% more on their electricity bills to cover the subsidies provided to about 1.6 million solar-equipped homes.
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Read more: https://www.latimes.com/specialsupplements/story/2025-08-12/hidden-cost-of-rooftop-solar-subsidies
I’m not suggesting rooftop solar subsidies are the sole cause of California’s fiscal crisis, California’s economic mismanagement is far broader than just the subsidies. But signing a bill to throw $60 billion at a self inflicted cost of living crisis probably won’t help fix the state’s financial problems.
California’s 2025 state government deficit was $18 billion dollars. This year’s budget is projected to be $35 billion deficit. What do you think the 2026 California deficit will be?
Will future historians look back on the coming collapse of California, and identify a desperate attempt to subsidise soaring green energy prices as the final straw which broke the state economy? Or will historians focus on the wealth expropriation bill as the trigger for the collapse? What do you think?
Given the quality of current “historians”, they will no doubt blame the deficit on the refusal of the rich to give over their wealth so that the Democrats can use it to buy votes.
YES .
And Governor Neu haul is likely to lose big time .
They will still be blaming Trump long after he is gone and the ice age has returned.
My hope is that those of us in better managed (Ha Ha : WA) states do not have to pay for that $60B. Who will?
This is old. It was written around the time of GW Bush’s proposed tax cut. But us vs them thinking remains the same, particularly in reference to billionaires leaving California.
(I assume that Newsom’s Aunt Pelosi isn’t worth a billion yet.)
That’s way out of touch with reality because it ignores the negative income tax credit (EITC?).
https://fakenous.substack.com/p/tax-breaks-for-the-rich
The negative tax IS included, because the first four men (and later five) in the original parable eat for free.
But they should be paid, not just pay no tax. That’s how welfare works.
I assume you mean “would be paid” rather than “should be paid”?
(That’s how a vote is bought.)
Socialism . . . everybody gets free beer . . . “nobody” pays for it.
Governments that install wealth taxes usually learn that they cost more to implement and enforce than they raise in revenue.
Sounds like doing that statistical trick and inverting the Laffer Curve to suit their argument better?
Net Zero is failing in the UK. Das Energiewende is failing in Germany. Gavin Newsom: Hold my chardonnay.
Although worldwide fading demand for EV’s has resulted in General Motors, Ford, and MBZ writing off billions and reducing production, contrary to the fading demand, California Governor Gavin Newsom remains oblivious that “Net-zero” ideologies are NOT affordable by the more than 6 billion on this planet living in poverty, is doubling down with $200 million in his 2026 State budget for EV rebates for the 5% of the 8 billion on this planet that live in California.
5% of 8 billion is 400 million.
Remember that California spent $15B on high-speed rail – and the first mile of rail has yet to be laid. And don’t forget the $24B they spent on homelessness? There is no accounting for how the money was spent. However, from the perspective of achieving homeless objectives, it was an unqualified success (pun intended): California saw its homeless population grow to 24% of the total number of homeless in the entire US. After all, since they didn’t worry about how it got spent and who got the outlay, their program must have been intended to improve homelessness state-wide, right? And it was unqualified because there were no guidelines, no standards, no nuthin’ about how it was to be done.
For $24 Billion you can get a whole army of homeless. And they got it.
When you tax something, you get less of it. When you subsidize something you get more of it.
Socialists tax hard work and success and subsidize poverty.
Sounds like California subsidizes homelessness instead of home building……
California is about to have a Billionaire Exodus and a resulting Crash in property value.
What politicians will those billionaires support after they leave CA?
No government knows how to leave other people’s money alone. Especially in the name of “public good”.
MISSING AN IMPORTANT PART….
The basis of the economy is still the partial reserve banking system…although highly modified so that it can be justified for bankers to lend out 20 times instead of only 10 times as much as they have on deposit before having issues with “runs” on the bank.
So if the government takes money from the rich….up to 20 times that amount is lost for bankers or other investment types to put into the economy in the form of loans to people with good uses for it. And in general, bankers are much better at selecting winning ventures than politicians.…
You are misinformed and misinforming. Banks cannot lend money they do not have. The ratio you mention, 10 to 1, not 20 to 1, is roughly the Tier 1 capital they must hold in order to ensure their depositors are secure. To repeat: banks can only lend money they have on deposit or have raised in the markets. What you might be misinterpreting is that the money the bank lends then becomes a deposit in the account of the company with whom the borrower has done business. This does indeed lead to a monetary spiral but the risk is spread throughout the economy and not, since the financial crisis, confined to the banks.
My point is exactly that bankers can not lend money that the government has confiscated from people who would otherwise deposit it in the bank. And you should do a search on “multiplier effect of the reserve banking system”….to see what economists say instead of just me…the effect of wealth diversion by government to non-enterprise activities is quite large on small business and wage earners.
BTW, present CET1 capital ratio minimum at 4.5% and the Tier 1 ratio of 6% are exactly the kind of sophisticated sounding ploys used to allow banks to sound healthy to their depositors and investors.
I question whether “one time” will be enough. Once that is spent, another “one time” will appear.
Tax their income while they earn it…tax what they spend it on….tax what they have left over….tax ‘m again when they die…
Expropriate the wealthy or expatriate them?
Income tax was a one time tax.
No one should care what’s happening in California. They voted for this hell-hole of their own making. The faster, and harder they crash, the more severe the warning for everyone else against repeating what California has done.
The California billonaires deserve the Billionaries’ Tax. A large number of them financially supported and encouraged the Ponzi Scheme which Newsom’s California has become.
So, let them stew in the cesspool which they have created. A state where untreated sewage flows down the city streets. There will be no end to this unless and until the Goddess of San Andreas decides to implement immediate and drastic correction and cleansing. The last time it happened was 1905. It will certainly happen again.
Do the wet streets cause rain?
Are these people not always willing to grab some money?
The tax on the wealth of billionaires would be tied up in courts for a decade. Courts have struggled to define when a tax becomes a government taking. A one percent tax of wealth each year for a defined, short period might be ruled a tax. Taking ten percent every year, leaving you with virtually none of the original asset after just a few years, would be ruled a government taking.
And that’s just the beginning. A tax on a “named individuals or [on] easily ascertainable members of a group” might be an unconstitutional on grounds entirely unrelated to the Takings Clause, as a bill of attainder, if it imposed “punishment.” I.e., the government is punishing those who had the ability to attain wealth.
A tax singling out one or a handful of citizens offends the Supreme Court’s
repeated invocation that the primary purpose of the Takings Clause is “to bar the
Government from forcing some people alone to bear public burdens which, in all
fairness and justice, should be borne by the public as a whole.”
One more reason to keep a conservative, strict Constitutionalist majority on the Supreme Court.
The income level for the original income tax was set so high that only about 100 people had to pay it
There is another problem with CA’s new wealth tax has another constitutional problem. The tax takes affect prior to the date the tax is even voted on.
And it took a Constitutional Amendment, one that specified INCOME was subject to taxation, to do it. A tax on WEALTH is not included in that Amendment.
If a Billionaire Wealth Tax proves fruitful it would be just a matter of time until the Billionaire Tax morphed into a Millionaire Tax, then to a Thousandaire Tax, then a moneygrubber tax on Government itself. Tea anyone???
You don’t tax a class of people more because they can afford more. The “Fairest Tax” might be an Untiered across the board flat tax rate with no deductions. Though how you stop industrious people from keeping earnings unreported is another matter. However, A straight VAT (tax) avoids unreported income issues but creates a black market to avoid VAT.
Ever hear of Monaco?
MACa: Make America California!
A one off tax will not pay for future mismanagement, look forward to a second one off tax.
In my country I’m familiar with “one time only” measurements. Now they are recurring and part of filling the black hole called budget deficit.
Always be careful with government math. If your energy bill is $500 and would go up to $600 but they reform so it stays $500 they think it’s $100 cheaper and you save money.
All billionaires move to Texas. The expropriated moneys are squandered on useless subsidies. The poor will get nothing extra and just stay poor. And the economy collapses which makes California a basket case. Then giving the west coast. back to Mexico for the cartels to sort out becomes an attractive proposition which would at the same time solve a massive illegal immigrant problem. What’s not to like?
5%–50%…No matter how much they try to steal from the rich, it will never make it to the poor, and they will have wasted it all in six months. Gavi and his cronies will still be fine dining.
Why does California need a billionaire tax (and it’s sure not to be just a one-time thing)?
Hint: Governor Gavin Newsom and the Democratic Party-controlled legislature in California continue to fully support the CA High Speed Rail (HSR) project, despite there being “some problems” with this boondoggle, to wit:
The initial projected cost for the full HSR system from San Francisco to Los Angeles was estimated at $33 billion when voters approved Proposition 1A in 2008.
Today’s reality: the cost has tripled, with recent estimates for the project exceeding $100 billion. The scaled-back, 171 mile segment from Merced to Bakersfield (aka “the HSR to nowhere”) alone is estimated to cost nearly $37 billion, which is more than the original budget for the entire project.
As for this quote for Governor Gruesome given in the above article:
“I just signed into law the biggest electricity bill refunds in a decade — up to $60 billion to help bring down costs for California families”,
former British Prime Minister Margaret Thatcher said it best
“The problem with socialism is that you eventually run out of other people’s money.”
Get the government out of the energy production and transmission business and California will once again be a flourishing state. This goes for other businesses also.
The flaw is the assumption that a person with a total worth of $1B has disposable cash to the tune of $50M. There are no Scrooge McDuck money bins.
So what happens when this billionaire is levied with a 5% tax? He tries to sell off an asset? To who? Anyone who could afford it is in the same boat. Shut it down? That will not raise the levy, but it will put people out of work. So that leaves… the Chinese. Maybe.
Ok. So sell stock. Estimates are ~ 200 billionaires in California. So, what happens to normal folk’s 401Ks and other retirement investments when the NYSE get hit with a sell of 200 x $50M ($10B)? What happens to those corporations that were now defunded by the stock sell off?
It is difficult to grok how such a tax could work without creating economic instability across the country.
Best guess is this is a gambit to get Uncle Sam to bail out CA again with our tax payer dollars.
My best guess is this is a gambit—and actually nothing more than talk—to garner future votes from low-information voters not smart enough to ask where the money come from . . . or, more likely, not caring because for sure it won’t be from them.
Total worth.
How can California tax an individual for holdings not in California?
Curious minds want to know.
Unfortunately, the US Constitution does not prevent any state from imposing its own specific income tax laws.
It is only the US Supreme Court that has stepped in to prevent any State, as well as the Federal Government itself, from imposing tax laws that could be viewed as confiscatory or that would blatantly be at odds with the Constitution’s “equal protection” clause.
A tax on the net wealth of individual citizens has never existed in the USA, but that matters little in today’s world where multiple bureaucracies must be “fed” no matter what.