California could take a historic step on billionaire taxation when voters decide on Proposition 40 on November 3. The proposal seeks to impose a one-time 5% wealth tax on residents whose net worth is at least $1 billion.
The plan has received support from six Nobel Prize-winning economists, including Indian-American economist Abhijit Banerjee, who won the 2019 Nobel Prize in Economics with Esther Duflo and Michael Kremer. Other supporters include Joseph Stiglitz, Paul Krugman, Peter Diamond and Daron Acemoglu.
In an open letter, the economists argued that California could become the first jurisdiction to introduce such a tax and potentially encourage similar measures across the US and other countries.
California is home to around 250 billionaires with a combined wealth exceeding $2 trillion. The economists said the wealth of the richest 0.001% in the state has increased from around $750 billion a decade ago to $2.3 trillion.
The proposal has also faced strong opposition. Google co-founder Sergey Brin has donated $100 million to the campaign against it, while several other wealthy individuals have reportedly moved out of California ahead of the proposed January 1 retrospective tax date.
Recent polls have shown a closely divided electorate, with some surveys giving the proposal a narrow lead.
Supporters say the tax could generate around $100 billion, while opponents have raised concerns about investment and the movement of wealthy residents and businesses.
The November vote could therefore become an important test of wealth-tax policy in the US.