More Taxes on the Rich? California and Britain Should Know Better

 

More evidence that republicans are not the only ones practicing stupid economics, governments, regardless of party or nation, never seem to learn. California’s proposed billionaires’ tax is the latest proof. Rather than reversing the policies that are already driving people and businesses out of the state, Sacramento is doubling down on them.

The measure is on November’s ballot, championed by Rep. Ro Khanna — an odd choice given his district covers Silicon Valley. But Khanna has presidential ambitions, and nothing burnishes progressive credentials like taxing billionaires. Tech entrepreneurs and venture capitalists warn it will choke innovation and growth. Khanna is now facing primary challengers backed by the same tech industry he represents. The plan: a one-time 5% wealth tax on Californians worth over $1 billion, applied retroactively to anyone who lived there as of January 1, 2026. Supporters promise billions for healthcare and education. Fat chance! It is more likely to keep driving wealth and investment out of the state.

Four questions worth asking

 

Has a tax like this ever actually raised what its backers promised? Does anyone believe it stays a one-time event? Is there any evidence that taxing the wealthy harder doesn’t send them packing? And what happens to billionaires who are stock-rich but cash-poor — forced to sell shares just to cover the bill? If I were in that position and this measure passed, I’d be gone before the ink dried, daring them to come after me. The lawsuits alone would be a spectacle.

Khanna isn’t dumb. He just plays the part — waving away the numbers on capital flight and insisting this time will be different. It won’t. IRS data show Los Angeles County has led the nation in taxpayer losses since 2023, with a net 17,496 filers leaving for other states and taking nearly $1.9 billion in income with them.

The exodus doesn’t stop there. Orange County lost a net 11,618 filers; San Diego County, 9,401; Riverside County, 8,968; San Bernardino County, 8,462. Most weren’t rich — but some high-profile ones were, Elon Musk among them, and they’ve already taken their taxable income to Texas, Nevada, Florida, and Tennessee. Pass this tax, and it’s not hard to imagine California’s high tech sector and Silicon Valley also headed for the exits.

Mark Cuban didn’t mince words: “If this passes, and it doesn’t directly impact me at all, I won’t be a Cali resident, but you can bet if I’m investing in a multi-billion dollar startup, I’m asking them to move from California first.” He added, “If this passes, only idiot startup founders stay in Cali.” No amount of evidence will stop California from trying anyway. It’s the gambler at the bar who loses a bet, doubles down on the replay, and loses again — fully aware of the cost, and completely undeterred by it.

Britain’s making the same mistake

 

Britain belongs in the same category as a poster child for fiscal dumbness. Its policies are turning it into a once proud country into one with per-capita income below that of the poorest U.S. state. The wealthy are leaving in droves. Britain now has 35,000 fewer residents worth £1 million or more than it did in 2024 — a 7% drop in two years, the sharpest decline since 2008.

Like California, Britain has built a tax system hostile to success: a 45% top income tax rate above £125,140 (roughly $170,000), a 24% capital gains rate, and a 40% inheritance tax on estates above £325,000. Now it defies reason that the new Prime Minister Andy Burnham is weighing a wealth tax on top of it. A recent poll found 66% public support for one, and a proposed 2% surtax on the wealthiest is projected to raise more than £10 billion a year. Care to bet they will raise that amount?

It apparently doesn’t register that the wealthy leaving is exactly why Britain is minting fewer homegrown millionaires in the first place. So let the Californians and the Brits, if Trump lets them in, come to the U.S. They are welcome here in Tennessee, as long as they don’t bring their socialist baggage with them.