The Return of a Failed Wealth Tax Experiment

California’s proposed billionaire tax promises to raise $100 billion by taxing the state’s wealthiest residents, but Sweden and Colombia already ran this experiment for decades, and both saw wealth taxes chronically underperform while accelerating capital flight. Confirmed departures from California billionaires like Larry Page, Sergey Brin, and Peter Thiel have already erased a large share of the projected tax base before the measure has even passed, suggesting the state may end up worse off than before it tried.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

Support for taxing wealth rather than income has surged in American political discourse. Progressive lawmakers have floated federal wealth tax proposals for years, and the idea has now migrated to the state level in dramatic fashion. In California, the 2026 Billionaire Tax Act would impose a one-time five percent levy on the worldwide net worth of anyone with a fortune exceeding one billion dollars, a measure its backers claim will raise as much as one hundred billion dollars for state coffers. The political appeal is obvious. Wealth taxes promise to extract revenue from those least likely to feel the pinch while sidestepping the political toxicity of raising taxes on ordinary earners.

The trouble is that wealth taxes have already been tried, at length and in earnest, and the record is not encouraging. Sweden ran a wealth tax for nearly a century before abandoning it. On the other hand, Colombia has cycled its wealth tax on and off for decades. Both cases offer the same lesson: wealth taxes are administratively porous, chronically underperform their revenue projections, and drive the capital they are meant to tax out of reach. California’s proposal is poised to repeat that pattern, and the evidence suggests it may do so faster and more severely than either historical precedent.…