California is chasing wealth that has feet

Original Article ↗ Hacker News Discussion ↗

California’s newly certified ballot measure for a one‑time billionaire wealth tax has reignited broader arguments over how the state should raise revenue and tackle inequality. Many commenters see the wealth tax as symbolic and easily dodged by relocation, and instead advocate reforming property taxation—especially Proposition 13—or adopting a land value tax to better capture unearned gains from land while encouraging housing supply. Others question whether California needs more revenue at all, pointing to high existing taxes, government waste, and the risk of further distorting its already fragile housing and business environment.

Wealth Tax vs. Land Value Tax (LVT)

  • Many commenters see the billionaire wealth tax as a sign of a broken tax system: if someone reaches hundreds of billions before paying “enough,” the problem started much earlier.
  • LVT is widely praised in theory:
    • Land is fixed, so taxing its unimproved value is seen as efficient with low deadweight loss.
    • Shifts burden from productive activity (buildings, work) to unearned land appreciation and speculation.
    • Encourages higher-density and productive use of valuable land; penalizes vacant lots and underused parcels.
  • Skeptics question:
    • Practical assessment of land-only values, especially with highly heterogeneous parcels (e.g., waterfront, cliffside).
    • Risk of political targeting via assessments.
    • Whether LVT truly cannot be passed on to renters; several argue any widespread cost increase tends to show up in rents over time via supply effects.
    • Impacts on marginal landlords and potential for abandonment in weaker markets.

California-Specific Issues (Prop 13, Housing, and Revenue)

  • Broad agreement that Proposition 13 badly distorts property taxes, shields long-term and especially commercial owners, and feeds housing scarcity and NIMBYism.
  • Proposals:
    • Limit Prop 13 to primary residences; remove or narrow protections for commercial property, second homes, and inherited low assessments.
    • Use deferrals for seniors instead of across-the-board caps.
    • Consider shifting toward LVT or land-heavy property tax while reducing taxes on improvements.
  • Some argue California has a spending/waste problem (high-speed rail, homelessness programs) rather than a revenue problem; others counter that tax design and housing policy, not just spending levels, are core issues.

Billionaires, Mobility, and Net Worth

  • Debate over whether higher taxes cause meaningful billionaire flight:
    • Some point to named individuals who already changed tax residency.
    • Others argue rich people value location and lifestyle more than marginal tax, and that if they leave, their distortive effects on local housing go with them.
  • Long subthread on whether “net worth is real”:
    • One side: wealth in stock is illiquid/volatile; taxing unrealized gains or net worth is conceptually flawed and hard to administer.
    • Other side: it confers real power (loans, control, political influence); can be taxed via wealth tax, taxing collateralized loans, or accepting shares in payment.

Equity, Incentives, and Morality

  • Some see wealth and land taxes as necessary to counter extreme inequality, intergenerational windfalls, and rentier gains (including inheritance step-up).
  • Others frame wealth taxes as driven by envy or covetousness, argue that high effective taxes on labor vs. light taxes on capital are already unfair, and warn about discouraging investment or sliding toward expropriation.
  • Disagreement over priorities: reduce spending and inefficiency vs. redesign taxes (LVT, progressive income, inheritance, corporate rules) to fund public goods and housing.