California wants to tax billionaires. Norway already did. One generated revenue. The other watched rich people leave. Guess which outcome financial journalists pretend is a mystery.
The pitch sounds clean. Tax the ultra-wealthy. Fund schools or roads or whatever politicians claim needs funding this week. Collect billions upfront. Declare victory at a press conference. Norway tried this. Their billionaires moved to Switzerland. Capital fled. Tax revenue dropped. The long-term impact remains "unclear" only if you consider rich people relocating to be an unexplainable phenomenon like crop circles or why anyone still watches CNBC.
California represents the biggest state economy in America. Also the state where a one-bedroom apartment costs what a castle in Portugal costs. Also the state that can't keep the lights on during summer. But sure, let's assume their tax policy will operate flawlessly while Norway's identical plan somehow produced ambiguous results that require further study.
Retail traders will read this headline and think it affects their three shares of Tesla. It does not. Billionaires have tax attorneys. You have TurboTax and a dream. They structure holdings through foundations and trusts in states without income tax. You structure your losses through Robinhood and call it tuition. When California passes this tax, the wealthy will shift assets before the ink dries. You will stay exactly where you are, reading articles about policies that impact people who do not think about you even once.
The revenue will arrive fast. Then it will disappear faster. California will express confusion. Economists will publish papers. The cycle will repeat in another state because politicians learned nothing from Norway except that voters like hearing the word billionaire followed by the word tax.
Your portfolio remains unaffected because billionaires leaving California won't take your $847 account with them.
Photo by Leo_Visions on Unsplash
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