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Not even Nobel Prize winners can save the ‘billionaire tax’

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You can usually tell a controversial idea like the “billionaire tax” is bad when proponents start trotting out teams of Nobel Prize winners to defend it.

If the idea really were that good, you wouldn’t need more than one Nobel laureate to make the case. The “tell” is when they quote half a dozen, as if there were a Nobel Prize for groupthink.

Six Nobel Prize-winning economists recently signed a letter urging Californians to pass Proposition 40, the one-time 5% tax on the wealth of the state’s billionaires.

The letter is wrong about everything, from the history of wealth taxes to the proceeds California can expect the tax to provide.

The letter calls Prop. 40 “the first-ever tax on billionaire wealth enacted anywhere in the world.” Governments have taxed billionaires’ net wealth for decades.

Twelve European countries imposed annual net wealth taxes in the 1990s. They raised very little revenue, cost a lot to administer, pushed investment out of their countries, and were politically unpopular. All but three of the European wealth taxes have been repealed. 

The letter claims that California billionaires paid income tax equal to just 1.6% of their wealth gains. This is also misleading. 1.6% is not an income-tax rate. It is income taxes paid divided by an increase in estimated asset values, much of........

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