The “Billionaire Wealth Tax” Is Really an Aggressive Expansion of California’s Property Tax

The proponents of this tax go to great lengths to avoid calling it a property tax. Instead, they refer to it as an “excise tax . . . on the activity of sustaining excessive accumulation of wealth.” This is disingenuous because the tax is clearly a property tax—not an excise tax. The label the proponents give this tax is of “minor importance.” Rather, what matters are the tax’s characteristics—i.e., its “real object, purpose and result.”  Flynn v. San Francisco (1941) 18 Cal.2d 210, 214-215.

Here, the “object, purpose, and result” of the Billionaire Wealth Tax is to generate revenue to a newly created Billionaire Tax Reserve Fund — 90% to a health care account and 10% to a food assistance account — by taxing ownership of property.  The tax bears all the essential characteristics of a property tax.  The ballot measure’s language: “sustaining excessive accumulation of wealth” is another way of saying “owning too much property”—whatever that means. This and the numerous references to “ownership” in the text of the initiative make it clear that “mere ownership” of assets—a traditional hallmark of a property tax—triggers imposition of the tax.

“Public entities may not resolve their revenue shortfalls through the subterfuge of enacting taxes on real property which violate those constitutional restrictions by labeling such taxes something they are not. We are required to uphold such constitutional provisions and invalidate such efforts to evade them, regardless of the merit of the goals for which such tax revenue is sought.” Tesoro Logistic Operations, LLC v. City of Rialto (2019) 40 Cal.App.5th 798, 813.

Make no mistake about it: the Billionaire Wealth Tax is a property tax–and it will be expanded.

Dakessian Law monitors California tax legislation and litigation. More to come.