This month, the anniversary of the California Gold Rush came and passed with little mention … for good reason. When James W. Marshall found gold at Sutter’s Mill, millions traveled great distances to seek their fortune in the “Golden State.”
Now, 178 years later, California has engineered an inverse Gold Rush, virtually chasing wealth from the state. Rather than covered wagons going West, there is a line of U-Hauls going anywhere other than California.
From boondoggle projects to reparations, California politicians continue to rack up new spending projects despite a soaring deficit and shrinking tax base.
Rather than exercise a modicum of fiscal restraint, Democrats are pushing through a tax that takes five percent of the wealth of any billionaires left in the state.
I have long criticized the tax as perfectly moronic for a state with the highest tax burden and one of the highest flight rates of top taxpayers.
In my new book, “Rage and the Republic: The Unfinished Story of the American Revolution,” I discuss the reversal of fortunes in California and other blue states as politicians unleash new “eat the rich” campaigns before the midterm elections.
The problem, of course, is that billionaires are mobile, as is their wealth. Liberals expect billionaires to stay put in a type of voluntary canned hunt. They are not. Billionaires are joining the growing exodus from the state, taking their companies, investments, and jobs with them.
The latest billionaire to be chased off may be Meta CEO Mark Zuckerberg, who is reportedly heading for Florida.
The growing departures have triggered outrage among many on the left, who are in disbelief that billionaires will just not stand still to be fleeced.
Former New York Magazine editor Kara Swisher captured that rage in a recent posting, declaring “you made…all your money in California, you ungrateful piece of s***, you could figure out a way to pay more taxes, and we deserve the taxes from you, given you made your wealth here . . . so why don’t we just do shock and awe at this point, because you don’t seem to be availing yourself to thinking that you owe your state something more.”
By some estimates, California has already cost over a trillion dollars in lost investments and business. That is no small achievement.
Here’s a mind teaser: How can you burn a trillion dollars (which would create a stack some 67,866 miles high) without taking years and destroying the environment?
California politicians have a solution: Have people take it out of the state in a reverse gold rush.
In addition to saying that they want to grab 5 percent of the wealth of these billionaires, California Democrats are planning to base wealth calculations on the voting shares of corporate executives. Often, particularly with start-ups, entrepreneurs have greater voting shares than actual ownership. However, they will be taxed as if voting shares amounted to actual wealth.
In other words, California is moving to nuke the entrepreneurs who created the Silicon Valley boom.
Emmanuel Saez, the U.C. Berkeley economist who helped design the tax, insists that they may not want to stay, but they will still be tapped. They are planning to trap the wealthy fleeing the state retroactively: “The tax is based on residence as of Jan. 1, 2026, sharply limiting their ability to flee the state to avoid paying. Despite billionaires’ threats to leave, I think extremely few will have been able to change residence by Jan. 1, given the complexity of doing so.”
The effort to retroactively impose such a tax is legally controversial and will face years of challenges. In my view, this is unconstitutional, but admittedly it is a murky area.
Regardless of the outcome, a wealth tax will affect a wide range of other wealthy taxpayers. If Democrats can get a retroactive wealth tax to be upheld, it is doubtful that they will stop with billionaires. Why should other top taxpayers stick around to find out where the next cull will fall in the tax brackets?
Recently, Gavin Newsom boasted, “California isn’t just keeping pace with the world — we’re setting the pace.” That is undeniably true if the measure is the record number of U-Hauls fleeing the state — more than any other state. Indeed, the only thing harder to find than a wealthy taxpayer in California appears to be a U-Haul.
According to U-Haul’s data, the state is again leading blue states in the exodus. The Washington Post noted recently that “California came in last. Massachusetts, New York, Illinois, and New Jersey rounded out the bottom five. Of the bottom 10, seven voted blue in the last election.” Conversely, “nine of the top 10 growth states voted red in the last presidential election,” with Texas again leading the growth states.
The Post put it succinctly, “People want to live in pro-growth, low-tax states, while the biggest losers tend to be places with big governments and high taxes.”
The problem is that, while the economics are horrific, the politics remain irresistible.
Democratic Rep. Ro Khanna, who represents part of Silicon Valley, recently mocked billionaires rushing to escape the state. Laughing at his own constituents, Khanna quipped, “I will miss them very much.”
You will not be alone as California becomes known as the La Brea Tar Pit of taxation.
They are on the verge of converting the state motto from “Eureka” to “Welcome to Hotel California, you can check out any time you like, but you can never leave.”
Jonathan Turley is a law professor and the best-selling author of “Rage and the Republic: The Unfinished Story of the American Revolution.”
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