California's proposed 5% tax on billionaires earning tens of billions for healthcare sounds fair but won't work because wealthy people can move. TJ Walker argues for taxing real estate, yachts, and luxury goods instead, which are harder to hide and generate ongoing revenue rather than a one-time windfall.
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Ultimize. Let's start with the actual proposal because this is one of those ideas that sounds fantastic in a headline. There's a plan in California to impose a one-time 5% tax on people worth more than $1.1 billion. The goal is to raise tens of billions of dollars, mostly for healthcare. And look, I'm not opposed to the premise. I like progressive taxation and I like people having healthcare. If you're sitting on a billion dollars, you should be contributing more. That's not envy, that's math. You've benefited from a system that includes infrastructure, legal protections, an educated workforce, and stable markets. It's reasonable to ask you to give more back into the system. But here's where good intentions collide with reality. The modern billionaire is not tied to one place. This is not 1879. They are structurally mobile. They don't think in terms of where do I live? They think in terms of where am I treated best financially? And the moment you introduce a policy that creates a large one-time hit based on residency, you're basically inviting them to reconsider that question or that answer to that question. Not emotionally, not politically. Financially. And that's a game they're extremely good at playing because they don't just have options, they have advisors, attorneys, entire teams whose job it is to find those options. If you really want to tax billionaires effectively, you have to stop thinking about where they live and start thinking about how they live, because residency is flexible. Wealthy people can change that with paperwork, but behavior is harder to find. When someone buys a $20 or $30 million home, a $5 million yacht, or spends six figures on luxury goods, that's not something you can quietly relocate on a tax form. It's visible. Even with LLCs, it's visible, it's measurable. And that's where smart policy can actually work. Instead of chasing billionaires from state to state, you tax the things they do and the things they own. Because if your entire strategy depends on them staying put and paying voluntarily, you're not designing a tax system, you're just crossing your fingers. Now, there's another layer to this that people don't always like to admit. Even billionaires who support higher taxes in theory don't love losing control over their money in practice. They'll write enormous checks to causes they care about where their name gets on it. They'll fund hospitals, universities, climate initiatives, But once money goes into a general tax pool, they don't get to decide where it goes. And whether you're liberal, conservative, or somewhere in between, there's always a concern that at some point that money gets used for something you fundamentally disagree with, like a statue for Trump. That hesitation matters because when you combine that mindset with the ability to relocate wealth and residency, you create a very predictable outcome. Avoidance. And it's not illegal, not dramatic. It's just quietly effective. And that's the risk with a policy like this. Not that it won't raise any money, but that it won't raise as much as expected while creating strong incentives for people to restructure their finances in ways that reduce future tax revenue, which is the opposite of what you're trying to accomplish. So what's the smarter approach? You shift from location-based taxation to asset-based and behavior-based taxation. Real estate is an obvious starting point. A home valued at $10 million or more isn't a basic necessity. It's a high-end asset. And unlike a mailing address, that property is physically anchored. It exists in a place. Same with large luxury items, boats, planes, collections of high-value assets. These are things that signal wealth in a tangible way. They're harder to obscure, harder to move, and easier to evaluate. Then there's spending. High-end consumption is where enormous amounts of wealth quietly circulate. Luxury goods, fine dining, art, exclusive services. They are consistent, trackable expressions of wealth. And important, they happen repeatedly, which means you're not relying on a single one-time event. You're creating an ongoing revenue stream tied to behavior. You can also layer in thresholds, not blanket taxes, but targeted ones. Above a certain level of spending or ownership, additional taxation could kick in. That's a system that adjusts naturally to how wealth is actually used. Now, yes, you can have a little fun with this. You could design a third home threshold because at that point you're not solving a housing problem, you're collecting scenery. Or a high-performance vehicle tier, where the faster and more expensive the car, the higher the tax, with no ending point. If it's a $2 million car, you spend more on tax than a $1 million car. These ideas might sound playful, but they're serious about something. There are dozens of ways to design a system that captures wealth more effectively without relying on assumptions where someone claims to live. Because ultimately, the goal isn't to make a statement, it's to generate revenue. And if your policy is easy to avoid, it doesn't matter how good it sounds, it won't deliver the results you need. So yeah, ask more from those who have the most, but do it in a way that reflects how wealth actually operates today. Because otherwise, you're not taxing billionaires more, you're just giving them another puzzle to solve. Okay, so I'm going to anger pretty much everyone today. Many progressives, liberals, they'll— TJ, you're shilling for billionaires, aren't you awful? That's not what I'm doing. But now everyone to the right of center is going to get angry with me because I will point out, if you want to tax billionaires, you're going to have to do what Thomas Piketty, the famed left-wing economist, has said. You're going to have to have world government because Billionaires can have 10 homes in 6 continents. So, unless they are taxed at the worldwide level, it's too easy to play whack-a-mole and for them to always be one step ahead. Because here's the thing, most people do reside in one state. They spend a lot more days in one state, in one city than they do anyplace, even if they have to travel for work. That's the vast, vast majority of people. Billionaires aren't like that. Between jetting off to Davos, vacation homes, going to celebrity wealthy friends' weddings in Morocco, they're constantly all over the place. So, from their perspective, they're thinking, ah, you know what? Yeah, I consider my Beverly Hills mansion or my Palo Alto estate my main residence, but let me add it up. I only spent 99 nights there. I spent, you know, 266 days other places, other mansions. Why should I give all my money to these guys in California? That's, that's their rationale. And here's the thing, it's, it's legal what they're doing. We've already seen a mass exodus of billionaires from California to where I live in South Florida. Take it from me, we don't need any more here. So I'm very sympathetic to wanting more tax dollars, needing more tax dollars, but until we have world government, which is not going to be anytime soon, there's going to have to be more creative ways of doing it. Because the real tragedy is you could end up reducing the tax burden for billionaires and wealthy people if you single them out based on residence. Ultimize.
