James Freeman devotes his daily Best of the Web column to the proposition that “California leads the world in taxing the rick” (“Another socialist deception targets the Golden State’s economy”). In the column he takes up the “billionaire tax” that will appear on the ballot in November.
We have covered the obvious problems that pervade the proposed law. Now that it has qualifed for the ballot, it is sure to pass. Who can be against taxing billionaires?
Beyond the practical problems we have touched on, Freeman challenges the premise of the proposed tax:
The ruthless socialists taking over the Democratic Party promote a consistent con that the rich in America are not taxed heavily. In this vein, Bernie Sanders enthusiastically supports a proposed 5% California tax on the wealth of billionaires, on top of all the taxes they already pay. The new tax will be on the Golden State’s November ballot unless supporters withdraw it by the close of business today [Ed: They didn’t — see the linked Guardian story above at “appear on the ballot”], reports Hailey Branson-Potts in the the Los Angeles Times. She notes:
A December analysis by the nonpartisan California Legislative Analyst’s Office said the tax would temporarily increase revenue by tens of billions spread over several years — but if too many billionaires move away, the state could eventually lose “hundreds of millions of dollars or more per year.”
You don’t say. Even before the imposition of this new levy, the state’s heavy tax burden has been driving rich people out of the state for years.
The Democratic candidate for governor of California, Xavier Becerra, has not endorsed the new billionaire tax but he parrots the socialist canard that the rich pay less in taxes than do people in the middle of the income scale. CalMatters quotes Mr. Becerra on whether he thinks California’s tax structure is fair:
I don’t because people who work hard are paying more in taxes than people who are uber wealthy. Billionaires are sometimes paying taxes at a rate that’s lower than your nurse, your teacher, your firefighter, your police officer. And we have to make sure we have a system that asks everyone to do their part.
It’s a crock, and not just because of the bogus generalization that rich people don’t work hard. When it comes to income tax bills, not only do the rich pay more than those at lower incomes—they shoulder more of the tax burden in California than in any other jurisdiction in the industrialized world.
Freeman challenges the purported fairness of the tax based on a Fraser Institute study:
Canada’s Fraser Institute recently set out to study how much of the total income-tax burden is borne by high earners in Canadian provinces compared with other places around the planet. Fraser reports:
Tax progressivity refers to the degree to which the total tax burden increases as an individual or family’s income increases. Put differently, it is about how the tax burden is spread across income groups.
This study measures and compares tax progressivity amongst 45 high-income Organisation for Economic Co-operation and Development (OECD) jurisdictions—29 countries, three federalist countries including only their high- and low-tax province or state, and all the Canadian provinces.
Overall, the Canadian provinces, and thus Canada as a whole, are deemed to have amongst the most progressive tax systems in the industrialized world.
No argument there. But as heavy as the burden may be on Canadian high earners, Fraser finds that there’s one jurisdiction that plunders affluent incomes more aggressively than anywhere else in the OECD.
Fraser’s findings, which measure both the federal and state tax burden, also show that the U.S. federal income-tax system is already so tilted toward taxing the rich that even affluent Americans who live in states without income taxes are still among the most heavily taxed people in the world. Fraser reports:
The two American jurisdictions analyzed in this study, California and Texas, ranked first and 4th most progressive, respectively, out of 45 jurisdictions, indicating that the US tax system is even more progressive than Canada.
And California’s is the most “progressive” of all, which means that no income tax system in the industrialized world punishes success more than the Golden State’s. Wealthy residents who want to pay only their fair share have no choice but to leave.
I have omitted the links in Freeman’s column above. However, Freeman does not link to the Fraser Institute study. I believe the study to which he refers is posted online as “Measuring Tax Progressivity in High-Income Countries (OECD).” Fraser has separately posted a brief here. The Fraser Institite study dates to November 2025.
I am guessing that Freeman’s attention may have been drawn to the Fraser Institute study by Emily Kraschel’s June 16 review of it for the Tax Foundation. Kraschel’s review is posted online as “US Has Most Progressive Tax System in OECD, New Index Shows.”
Query what the “fair share” of the wealthy is when it comes to the tax burden. It remains an eternal mystery.
William Voegeli doesn’t address the question directly, but provides valuable background for the argument in Never Enough: America’s Limitless Welfare State. Voegeli summarizes the theme:
Since the beginning of the New Deal American liberals have insisted that the government must do more – much more- to help the poor, to increase economic security, to promote social justice and solidarity, to reduce inequality and mitigate the harshness of capitalism. Nonetheless, liberals have never answered, or even acknowledged, the corresponding question: what would be the size and nature of a welfare state that was not contemptibly austere, that did not urgently need new programs, bigger budgets, and a broader mandate? Even though the federal government’s outlays on all the programs in its “Human Resources” category were, after adjusting for inflation and population growth, 15 times larger in 2007 than in 1940, liberal rhetoric is always addressed to a nation trapped in “Groundhog Day,” where every year is 1932, and where none of the existing welfare state program that spends tens of billions of dollar matter or even exist.
Never Enough explores the roots and consequences of liberals’ aphasia about the welfare state’s ultimate size, scope and cost, assessing what liberalism’s lack of a limiting principle means for the policy choices confronting America in a new century. It concludes that the liberal project has jeopardized our experiment in self-government by encouraging Americans to regard their republic as a vehicle for taking advantage of their fellow citizens, rather than as a compact for respecting one another’s rights and safeguarding future generations’ opportunities.
Published in 2012, Voegeli’s book grows more relevant every year.
