Californians will face two competing tax measures this November. The first is the Billionaire Tax Act, a one-time 5% levy on the accumulated net worth of the state’s richest residents. Less well-known is the Retirement and Personal Savings Protection Act, which would establish constitutional boundaries for what Sacramento can and cannot tax, prohibiting new levies on retirement accounts, personal savings, and individually owned assets while banning retroactive taxation.
Every Californian with even a modest amount of money set aside—far beyond the state’s billionaires targeted by the wealth tax—should understand what these measures represent.
The Billionaire Tax Act promises significant revenue but faces severe challenges. According to research by Joshua Rauh of Stanford University and his Hoover Institution colleagues, the measure would likely raise $100 billion in revenue. However, early departures from California—including Larry Ellison leaving in 2020 and six others, including Google co-founders Larry Page and Sergey Brin, departing between the proposal’s announcement and December 31, 2025—already reduce projected revenue by nearly 40%. When quieter migrations are factored in, expected revenue drops to $40 billion.
Adding further losses, Rauh’s analysis shows that the measure would also shrink the state’s existing tax base from departing billionaires. The “net present value” of the Billionaire Tax Act is estimated at a minimum $25 billion loss for California.
The proposal also faces retroactivity issues. It aims to tax billionaires based on residency and conduct dating back to January 1, long before any vote was cast. Individuals who believe they lawfully established residency elsewhere might face years of legal battles with the state over details as arbitrary as where these billionaires kept their pets or held club memberships.
The “one-time” framing of the tax is also questionable. The measure includes a constitutional authorization to lift California’s cap on taxation of intangible personal property, creating the potential for future wealth taxes at any rate, threshold, or timing. This would effectively establish a permanent new power for the state.
Given these issues, Californians should pay close attention to the second ballot measure: the Retirement and Personal Savings Protection Act.
All Americans’ savings deserve protection under three clear principles. First, fairness: When workers set aside after-tax income for retirement, the resulting balance is not untapped revenue. Taxing this savings as if it were fresh revenue would tax the same dollar twice. Second, stability: A tax system that reaches into asset values rather than income flows is inherently volatile. A founder whose stock drops 40% in a downturn still owes wealth tax on last year’s higher valuation; an ordinary saver with a taxed 401(k) faces similar absurdity. Third, and most urgent, is California’s own track record: state spending is projected to grow by nearly 70% between 2019 and the coming fiscal year, drastically outpacing revenue increases. This has resulted in a cumulative deficit exceeding $50 billion over the next two years.
If the wealth tax fails to deliver—despite initial projections—it will likely target nonbillionaires. As Rauh noted, while approximately 0.001% of California households are billionaires, about 62% have retirement accounts. Federal law treats health savings account (HSA) contributions and earnings as tax-exempt, but under California’s current system, interest, dividends, and capital gains from HSAs are taxed as ordinary income—impacting roughly 4.5 million residents who are not billionaires or millionaires.
Politicians in Sacramento have already decided that HSA assets are revenue-generating. Extending this to retirement accounts like 401(k)s and IRAs would require no new principles, only the same willingness.
The Billionaire Tax Act is a dangerous first step that puts retirement savings of ordinary Californians at risk. The Retirement and Personal Savings Protection Act is designed to prevent exactly this outcome.
