"California's proposed wealth tax aims to go after billionaires' balance sheets, but it largely sidesteps the way many ultrawealthy people actually generate spendable cash: they borrow against their assets, tax‑free, and never "realize" income in the first place. As long as that borrowing model stays intact, a one‑time levy on wealth may raise money once, but it does little to change the system that lets cash‑poor billionaires live richly while reporting very little taxable income."
"California is weighing a ballot measure, the Billionaire Tax Act, that would impose a one‑time 5% tax on the total assets of state residents worth $1 billion or more. The tax would apply to anyone who was a California resident on January 1, 2026, with payment due in 2027 and the option to stretch it over five years for an additional charge. Supporters, led by a major healthcare workers' union, pitch the measure as a way to raise roughly $100 billion to backfill expected federal healthcare cuts and force the wealthy to pay what they call their fair share. Gov. Gavin Newsom has warned that the levy could backfire by accelerating a departure of high‑net‑worth residents, even as he continues to defend the state's broader progressive tax system."
"To take this example from the abstract into the practical, consider the examples of Elon Musk, the world's richest man, and Mr. Beast, the world's most popular YouTuber. Musk does not live on a normal "salary" the way most people do, with most of his wealth tied up in shares of his companies such as Tesla and SpaceX, and he typically finances his spending by borrowing against those holdings and occasionally selling stock. In that sense, he is extremely asset‑rich but comparatively low on ordinary cash income, using large credit lines backed by his equity to pay for homes, jets, and other expenses instead of taking regular paychecks."
California is considering a one‑time Billionaire Tax Act that would levy 5% on total assets of residents worth $1 billion or more, applied to those domiciled in the state on January 1, 2026, with payments due in 2027 and an option to stretch payments over five years for an added charge. Supporters aim to raise roughly $100 billion to offset expected federal healthcare cuts. The proposal faces pushback over potential outmigration of high‑net‑worth residents. Many billionaires finance spending through tax‑free borrowing against equity rather than ordinary taxable income, limiting the long‑term impact of a single wealth levy.
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