Weekly Whopper: “Prop 40 is Just a One-Time Tax”

SACRAMENTO, CA — This week, the No on 40 coalition is fact-checking the false and misleading claim that Proposition 40 is just a one-time tax, and that wealth taxes like this actually work. In truth, Proposition 40 is being described by the French professors who authored it as an “experiment,” plans are already being hatched to expand and extend it, and the vast majority of similar measures around the world have been abandoned because of capital flight, economic damage, administrative costs, legal problems, and weak revenue.

KEY QUESTIONS: What guarantee do voters have that this is actually a one-time tax? Is Prop. 40 just an experiment on Californians, as has been repeatedly stated by its authors? If wealth taxes have consistently failed around the world, why is Prop. 40 being pushed in California?

THE CLAIM: Proposition 40 is just a one-time tax, and wealth taxes like this work.

THE FACTS:

Prop. 40’s French authors call it an “experiment” — and California is their laboratory. This would be the first net wealth tax in modern U.S. history, and the French academics who drafted Proposition 40 see California as the ideal place to test their idea. One of the authors recently affirmed: “It’s going to be an experiment. We see the results, and then we decide whether that experiment works, is promising.” He added: “It is true, I’m not there to pretend that it’s one, once, and never again — no wealth tax will ever happen after that one. You can’t commit to that.” 

Proponents are telling voters it’s just a “one-time” tax, while at the same time making plans to expand it. While Prop. 40’s backers pitch Prop. 40 as a “temporary,” “emergency,” and “one-time” tax to voters, they’re hatching plans for something much bigger. As one of the French authors put it recently: “California could absolutely implement an annual wealth tax…This one-time tax is just the starting point of what could be.” Another prominent proponent wrote: “The tax should not stop at billionaires, it must reach centimillionaires. The tax has to reach all fortunes $50 million and up.”

It will lead to more taxes and higher taxes. This “one-time” tax earmarks funds to needs that require reliable, sustained investment. When the money runs out, expect the proponents to come back for more. One study of state tax hikes found more than half of temporary measures became permanent or were replaced with other tax increases. Additionally, Prop. 40 includes a hidden provision that gives the State Legislature the power to amend the measure without voter approval, which could mean higher taxes for all Californians. 

Over the past three decades, the vast majority of countries with wealth taxes abandoned them. In 1990, 12 industrialized countries levied a wealth tax. By 2025, nine countries had repealed theirs because of capital flight, adverse effects on entrepreneurship and innovation, administrative costs, legal problems, and disappointing revenue. 

The few that still have these taxes face massive economic consequences. According to MIT economists, capital flight and avoidance remain a problem in countries that have maintained their wealth tax.

These taxes don’t produce the revenue promised. According to an Organization for Economic Cooperation and Development report: “Decisions to repeal net wealth taxes have often been justified by efficiency and administrative concerns and by the observation that net wealth taxes have frequently failed to meet their redistributive goals. The revenues collected from net wealth taxes have also, with a few exceptions, been very low.”

If Proposition 40 passes, expect the same result. Stanford University research finds that “the one-time levy would collect approximately $40 billion in wealth tax revenue, less than half of the roughly $100 billion projected by proponents.”

WHAT THEY’RE SAYING:

Tax Foundation Europe Economist Cristina Enache: “Taxing wealth is hardly a new idea. Such policies have been well tested, and their track record has been disappointing. Among other things, the revenue typically falls short of projections; behavioral responses inevitably erode the tax base; economic costs usually extend beyond the wealthy; and persistent legal challenges add another layer of uncertainty. Wealth inequality may very well be a problem worth addressing, but wealth taxes are not the solution.” (Project Syndicate, Why Wealth Taxes Always Fail, August 5, 2026)

Stockholm’s Research Institute of Industrial Economics Professor of Economics and Senior Research Fellow Magnus Henrekson: “California does not need to repeat Sweden’s mistake to learn from it. The state’s prosperity has been built by people who turn ideas into companies. Tax policy should ask successful citizens to contribute, but it should not teach future founders that the reward for building in California is to become a fiscal target. Sweden’s message to Californians voting in November is simple: A wealth tax may begin as a symbol of fairness, but it can end as a tax on the very dynamism that makes prosperity and generous public services possible.” (SF Standard, “Sweden’s warning to California: Don’t tax wealth like we did,” July 23, 2026)

Stanford University Economists Joshua Rauh and Benjamin Jaros: “Other countries have made the same mistake Californians are being tempted to commit…These nations discovered that wealth taxes are hard to implement, cause wealthy people to move and take their money elsewhere and raise far less tax revenue than promised. The co-authors of the tax plan must know this history well: France, their home country, abolished its wealth tax in 2018 after an estimated 200 billion euros (about $228 billion) left the country over two decades and, according to estimates, the tax generated an annual budget shortfall of 7 billion euros. All of the things that happened in France would happen in California, and the consequences would probably be worse.” (NY Times, “It Failed in France. It Would Be a Disaster in California,” July 5, 2026)

Tax Foundation President & CEO Daniel Bunn: “By imposing these taxes — even on a narrow basis — countries harm innovation and long-term economic growth. This could be part of the reason so many countries have abandoned these sorts of taxes…If states move forward with their wealth taxes, we should expect similar results. The revenue they bring in will be limited and unreliable, yet the headache they create will drive high earners and businesses out of the state.” (The Hill, “The state race for wealth taxes will fail — just ask Europe,” April 30, 2026)

California Tax Foundation Fellow Jared Walczak: “Wealth taxes undercut economic activity even among those who remain. Wealth taxes affect entrepreneurial decision-making, reduce returns on investment, introduce economic distortions and undermine job creation and business expansion…A California wealth tax, at a rate higher than anything in Europe and applied to a far greater share of the wealth of highly mobile billionaires, doubles down on the economic harms that led most European countries to abandon them.” (CalMatters, “California can learn from European countries that tried wealth taxes,” February 19, 2026)

INDUSTRIALIZED COUNTRIES THAT HAVE REPEALED WEALTH TAXES:

Last week, the No on 40 coalition fact-checked the claim that Proposition 40 won’t impact California’s economy, noting that the measure has eroded the state’s tax base by more than half a trillion dollars, is already damaging the economy and budget, will not collect the revenue promised, makes California less competitive, and jeopardizes our innovation and entrepreneurship edge. The coalition has also pushed back against the assertion that Proposition 40 will address California’s healthcare needs, noting that the measure relies on an unstable revenue source, has no safeguards to ensure funds are actually directed to patient care or lower costs, and will ultimately harm the healthcare workforce and safety net it purports to protect.