A proposed one-time tax on California's billionaires would raise far less than earlier projections suggest and would very likely leave the state a net fiscal loser once existing tax receipts are counted, according to a new working paper by Benjamin Jaros and Joshua Rauh published by the National Bureau of Economic Research (NBER), a nonprofit research organization that distributes working papers by academic economists. Working papers are circulated for discussion and comment rather than peer review, so the findings represent the authors' analysis rather than a journal-vetted result. The working paper is available on the NBER website.

The paper examines the revenue and migration impact of the 2026 California Billionaire Tax Act, a measure that would impose a one-time 5 percent tax on the worldwide net worth individuals holding more than $1 billion, regardless of where their assets are located.

To estimate the levy would perform in practice, the authors draw on data from the Forbes Billionaire List, news reports detailing the residential real estate holdings of California billionaires, and public announcements of billionaire departures from the state. By pairing observed relocations with asset data, the study applies several different methodologies to model the behavioral response to the tax and the revenue loss it would trigger.

Even before accounting for reductions in other tax bases, such as the income tax, the study estimates that the Act would collect approximately $30 billion, within a range of $28 billion to $36 billion. That figure is less than a third of the $100 billion projected for the tax by Galle et al. (2025). The gap between the two estimates, per the authors, hinges on how much of the tax base is still in California when the levy comes due.

The narrower estimate incorporates several adjustments. It reflects publicly confirmed taxpayer migration that has already eliminated nearly 30 percent of the Act's wealth tax base, applies a litigation-survival discount to the remaining base, and is validated against the wealth tax base elasticity literature.

Migration is central to the paper's arithmetic, since each confirmed departure removes part of the one-time tax base along with an ongoing stream of income tax payments. The authors estimate that California's billionaires contribute between $3.3 billion and $5.8 billion annually in state income taxes. Because the wealth tax would be collected only once, the present value of permanently lost income tax collections from departures more than offsets the one-time wealth tax revenue, yielding a net present value of negative $38.9 billion for the state.

The conclusion appears robust across a wide range of assumptions. Across 100,000 simulated combinations of revenue outcomes and discount rates, 85 percent of plausible scenarios produce a negative net present value of state revenues. Taken together, the results support the authors' assessment that the tax is very likely to reduce, rather than increase, total state revenue. The two variables worth watching are migration and litigation: additional confirmed departures would shrink the base further from the nearly 30 percent already gone, and the authors' litigation-survival discount reflects the possibility that legal challenges prevent the levy from ever being collected.

The findings were summarized on the economics blog Marginal Revolution on October 19, 2026, where the post concluded: "Overall this issue is a good litmus test for who still thinks like an economist."