California voters are being asked to decide on Proposition 40, a one-time tax on billionaires' net worth, and economists studying it have reached very different estimates, NPR's Planet Money reported Monday, Nov. 2.
The measure
According to NPR, the measure would impose a one-time 5 percent tax on billionaires' net worth.
The two estimates
NPR reported that a team led by economist Gabriel Zucman estimates the tax could raise about $100 billion. Joshua Rauh and Benjamin Jaros estimate that it could ultimately cost California about $39 billion, because billionaires leaving the state and lost income-tax revenue would outweigh what the levy collects, according to NPR and the San Francisco Standard.
Why the numbers differ
The San Francisco Standard described the economists as feuding about the measure's impact. A National Bureau of Economic Research paper on the tax's net present value is among the studies behind the debate.
Why it matters outside California
Wealth-tax proposals draw attention nationally because the estimates depend on assumptions about whether the wealthy would move or change behavior.
Sources: NPR Planet Money, San Francisco Standard, KQED, National Bureau of Economic Research