California’s billionaire tax has a French connection –– and riots across the Atlantic offer a grim warning

If Californians want to see the results of socialist policies like the “billionaire tax,” they need only look at the rioting in France — where the inspiration for the tax comes from.

The “billionaire tax,” known as Proposition 40, is a one-time 5% wealth tax that will hit California residents with assets valued at over $1 billion.

And the tax on the California ballot has a French connection.

Emmanuel Saez, a French-born Berkeley economist, helped draft Proposition 40. Gabriel Zucman, another prominent French economist at Berkeley, has coauthored much of the research making the case for the tax, along with famed French economist Thomas Piketty, who wrote the 2014 bestseller “Capital in the 21st Century.”

The book, which decries wealth inequality as the most important issue in society, encouraged left-wing politicians throughout the Western world to propose more wealth taxes.

Saez and Zucman have also influenced Senators Bernie Sanders and Elizabeth Warren in their wealth tax proposals.

Before Californians take the advice of these French economists, they should seriously examine France’s experience with taxing wealth and financing an expansive welfare state.

Over the past few weeks, French bond yields have jumped amid fiscal woes brought on by anemic economic growth, in part due to high taxes and regulation over decades. 

Last year, French public spending reached 57.3% of gross domestic product. The government ran a deficit of 5.1% of GDP. By the end of June, public debt had reached 119% of national output.

France’s pension problems (not unlike California’s) illustrate the bind. Pension spending reached €422 billion, or 14.1% of GDP, in 2025. In 2023, French leaders realized they were sitting on a ticking time bomb, and raised the retirement age. Yet France suspended those increases until 2028.

The political temptation is to preserve every benefit and find another taxpayer to finance it. Weak economic growth in France makes the task even harder.

France has inventive people, but its rules can punish firms for expanding. These rules include labor regulations that raise costs for firms and reduce innovation.

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France has already had a bad experience with wealth taxes, such as those French economists are proposing for California. The first French wealth tax began in 1982, and was abolished in 1986.

The problem: France discovered that wealthy taxpayers can move.

France tried again, restoring a wealth tax in 1989. But in 2018, it narrowed the tax to real estate, rather than financial wealth.

Saez and Zucman want to minimize the wealth of the richest individuals — just like Bernie Sanders believes billionaires should not exist.

That’s different than simply wanting to build a strong social safety net. If taxes can be used to fund well-designed assistance programs, then social welfare spending can improve opportunity and productivity.

The question is whether a tax causes more harm than good. A policy that drives away enough taxable income can leave the government with less money to redistribute.

California has already seen how very high income taxes change behavior. In a study of the state’s 2012 income-tax increases at the top end, one Hoover study by Josh Rauh and Ryan Shyu found that migration and changes in taxable income eroded 60.9% of the expected revenue gain within two years.

The tax still raised money. But the gap between the original projection and actual revenues should trouble anyone promising that California’s billionaires will simply pay up.

More directly, Rauh and his coauthors examined the proposed billionaire tax in a March 2026 study. They estimated that it would collect only about $40 billion, less than half the roughly $100 billion supporters forecast. That’s thanks, in part, to the fact that billionaires have already started leaving to avoid the tax.

Venture capitalist Chamath Palihapitiya says that $1 trillion in wealth has already left the state.

Moreover, the Hoover study found that billionaires would take enough future income-tax payments with them to leave California $24.7 billion poorer. These are forecasts, not collected tax receipts, but the possibility of losing revenue in the long run to raise revenue for a short while should give voters pause.

Saez and Zucman claim that the one-time tax would dwarf any lost income taxes in the future. But there are also future costs to investment. Rich people deciding where to put their money must also consider whether another “one-time” tax will eventually follow.

Yes, supporters of the “billionaire tax” claim that it would raise $100 billion in revenue, with 90% earmarked for healthcare. It is an appealing promise to voters worried about paying for essential services.

But France has made plenty of appealing promises, too. And those promises were broken.

That’s partly why rioters are in the streets, smashing businesses and setting fire to ancient landmarks. There are other social causes, but socialist policies have been a major factor.

In considering Proposition 40 and the “billionaire tax,” California voters should perhaps avoid listening to French socialist economists.

Jon Hartley is a policy fellow at the Hoover Institution and an assistant professor of economics at the UT-Austin School of Civic Leadership.