Gov. Gavin Newsom is in a panic. He’s terrified that a measure to tax the billionaires might qualify for the November ballot, and (gasp) some of those people (who might also support his campaign for president) might decide to leave the state. The Chron is all worked up. The Standard is keeping score of who is fleeing.
Peter Thiel and Larry Page, are already moving.
But the reality is that most rich people don’t abandon the place where they live because they have to pay taxes—and most of the billionaires in this state pay very little in the way of taxes right now.
Among those who argue that wealth taxes are a good idea: The Patriotic Millionaires, a group of very rich people who think that very rich people should pay more taxes. (One of them, a former HP exec, says that nobody needs more than $30 million.)
I caught up with an East Bay member of the group, Maureen Kennedy, this week, and she talked about why it wouldn’t be all that bad if some of the billionaires (who fund right-wing anti-labor causes) decided to take a hike.
A slightly condensed version or our interview follows.
48HILLS We have this billionaire tax that may be on the ballot, and as you know, the governor has said he will do everything he can to defeat it, that this will destroy California’s economy. It will be the end of startup culture. It will be the end of everything. All the billionaires will leave. Tell me how you respond to that.
MAUREEN KENNEDY First of all, I would say some of the billionaires have already left. They’ve already left because they want to minimize the possibility that they’re going to end up coming under this requirement. If we go forward with the initiative now, it’s not going to change that fact. I don’t think these guys are going to spend their days going back and forth to Texas depending on what California.
There’s data out there. You’ve probably seen the stuff that suggests that at least millionaires tend to say in high-tax areas because they’re there for a bunch of reasons. For family reasons. For the amalgamation effect. Back from my days in economic development, I learned that a lot of people who are working on solar panels live in Indianapolis. Because there are benefits to having people who are doing similar things meeting with each other, at the cafe, and all that kind of stuff. So there are those reasons for people to stay.
It’s interesting to me to raise a question about what would be the impact on California if more of the billionaires moved away.
When you stop and think about some of the pieces of legislation that that have passed over the last several years, things around independent contractors versus employees, minimum wage legislation, and so forth, those billionaires have, in my mind been on the wrong side of all those arguments, and have been putting money into the wrong side.
So there’s an argument that, in terms of the broader equality agenda in California, it might not be a bad idea if some them got out of the picture.
Back to the governor’s perspective. When you look at what these billionaires are putting back into the economy, in terms of charitable donations and how much they pay in California taxes, these folks tend not to have income, and they tend not to have realized capital gains. They organize their finances specifically for that purpose.
What kind of tax are we getting from these folks? Is it a huge part of our state tax revenue? It appears not to be, at least not from a fair share perspective
48HILLS Talk about why a wealth tax is important.
MAUREEN KENNEDY The primary driver for this is the cost of health care. Costs have gone up twice as fast as wages have gone up. To the degree that the revenue from this would go to healthcare, that’s a gaping hole that we have in our state budget. We need some kind of revenue source for this, and then the question becomes, what tax, what are the options? And you look at who is paying right now, and who is not paying, and these folks have huge assets that are galloping ahead. Many of them are invested in AI, with firms that are not on the stock market, that you and I can’t invest in. These firms are worth so much money, and none of that is getting taxed. That’s why it makes sense.
These folks have figured out a way to make sure there are no realized capital gains, that would be taxable. Then let’s figure out a way to have them pay, a more innovative way.
We are incredibly lucky and should be very grateful to be living in California. The center of dynamic technological changes. They have been incredibly well compensated. A wealth tax is only fair.
