The wealth tax: Where did all the money go?

California voters in November will decide on Proposition 40, a supposed "one-time" 5 percent net worth on the assets of billionaires. The rest of the nation — including Nevada — should pay close attention to the results because this is a dry run for Democrats and the 2028 election. If Prop 40 passes, expect the effort to go national — particularly as supporters of the far left and socialists gain a significant foothold in the Democratic Party.

Supporters of the tax estimate it will raise $100 billion, which they claim will be used to offset federal Medicare "cuts" in coming years.

But, CBS News reported this week, a Stanford University review of the proposal argues that it may generate only $30 billion, given that seven billionaires — making up 30 percent of the state's billionaire wealth — have already moved out of California rather than be subjected to such punitive and confiscatory tax policy. In addition, the study's authors note, those who have fled will no longer pay California income taxes on an annual basis, amounting to potential revenue losses for the state of up to $3.5 billion a year.

"If those losses persist permanently," CBS News reported, "their value in today's dollars would exceed the wealth tax proceeds by about $39 billion," the paper found.

"These findings suggest that the Billionaire Tax Act will not fulfill the primary functions for which it was designed," Stanford economists Benjamin Jaros and Joshua Rauh wrote. "Although the act was designed to raise revenue, behavioral response prior to voting has eroded most of the projected tax base."

And if you think this tax will truly be a one-time confiscation of wealth or won't eventually be expanded to cover other well-off Californians, we've got a slew of oceanfront property in Needles available for sale.

The reality of fleeing capital isn't the only problem with this awful idea. If passed, this tax will no doubt generate immediate litigation. "The measure's constitutional flaws far exceed what can be accomplished through judicial reformation and point toward striking the tax down in its entirety," argues Jared Walczak, a senior fellow at the Tax Foundation.

Walczak also notes that, if the courts step in, "California will have the worst of all worlds: a threat that drives away some of the state's wealthiest taxpayers and spooks the next wave of startup founders, costly litigation that could drag on for years, and not a single dollar in new revenue. This is not a minor concern. The tax is legally dubious as well as economically damaging."

Polls show Prop 40 running slightly ahead, once again highlighting California as the testing ground of progressive folly.

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