Tax Houses Like Texas and California Would Raise More Than a Billionaire Tax

Tax Houses Like Texas and California Would Raise More Than a Billionaire Tax

A rival revenue idea lands days before the vote

On November 3, Californians vote on Proposition 40, a one-time 5% tax on the net worth of residents worth more than $1 billion. The union behind it says the levy could raise about $100 billion and help cover federal cuts to health spending, according to Fortune. Days before the vote, Princeton economist Owen Zidar and University of Chicago Booth economist Eric Zwick offered a rival idea in an October 29 New York Times op-ed, amplified by Fortune on October 31: match Texas on property taxes, and California would raise even more than the billionaire tax.

What Proposition 40 would actually do

The tax targets people whose primary residence was in California as of January 1, 2026, covering roughly 200 billionaires, according to Forbes. The rate is a one-time 5% of wealth, payable starting as soon as 2027 with up to five years to pay. Patch reports that California currently does little valuation of personal property, so the state would have six months to build a system covering stocks, investment accounts, business interests, plus art collections, wine vaults and cars. Yahoo Finance notes two competing ballot measures, Propositions 41 and 42, backed by opponents of the tax; if either gets more yes votes than Prop 40, it could block the wealth tax from taking effect.

The 'original sin' is Proposition 13 from 1978

Zidar and Zwick call Proposition 13, the 1978 law that rewrote California property taxation, the "original sin" of the state's tax code. As Fortune and its syndicated versions summarize, Prop 13 capped property taxes at 1% of assessed value, limited annual increases to 2%, and allowed reassessment to market value only after a sale or major renovation. Passed amid the tax revolt that preceded Ronald Reagan's presidency, it pushed California toward heavier reliance on income taxes, including capital gains. Beneath residents' feet, the economists write, sits "a much better, bigger target": undertaxed housing wealth.

Texas taxes homes at about twice California's rate

Property-tax data site ResistNow puts the comparison in numbers: Texas collects about 1.40% of home value, ranking 7th nationally, while California collects about 0.70%, ranking 32nd. Texas caps annual growth in a homestead's appraised value at 10%; California caps assessed-value growth at the lesser of 2% or inflation, resetting only on sale. Applied to California's vast housing stock, Texas-level taxation would mechanically dwarf a one-time levy on a few hundred billionaires. "It is simply not possible to fund the state's needs by leaning on a few hundred people, as politically appealing as that may be," Zidar and Zwick argued, urging the state to broaden beyond billionaires to hundreds of thousands of wealthy people who could pay a property tax "that finally works."

The 'everywhere millionaires' outnumber billionaires

The economists' case rests on their book, The Everywhere Millionaire. Harvard Gazette quotes Zwick's definition: net worth of at least $5 million plus an ownership stake in a private business, covering about 3 million Americans with average wealth of around $25 million, together more than 10 times the combined wealth of the Forbes 400. The San Francisco Chronicle reports that Dun & Bradstreet 2020 data found 6,300 private California businesses with revenue between $25 million and $1 billion, whose owners are often such millionaires: wholesale distribution at 22%, manufacturing at 16%, and finance, insurance and real estate at 11%. A property tax reaches this broad stratum; the billionaire tax does not.

Some billionaires already moved, and residency fights linger

Because Prop 40 uses January 1, 2026 as its residency test, some of the state's richest people already left. Fortune reported that Uber cofounder Travis Kalanick said he moved to Austin, Texas, on December 18, 2025, dodging a hit of about $180 million implied by an estimated $3.6 billion net worth. CalMatters cautions that leaving does not end the matter: inventor Gilbert Hyatt moved from Southern California to Nevada before receiving royalty payments in the early 1990s, yet the Franchise Tax Board pursued him for 1993 income taxes for years. Houses, unlike billionaires, cannot move, which is part of why the economists call property the more reliable base.

What comes next: the vote, then the courts

The near-term path runs through November 3: whether Prop 40 passes, and whether Props 41 or 42 overtake it. Yale Law School's interview with Zwick cites a Yale Budget Lab analysis reaching a similar verdict that only so much can be raised from that top group. Even passage means years of valuation work and residency litigation. Repealing or loosening Prop 13 would be politically far harder and is not on this ballot; it remains an op-ed proposal, not a proposition. Voters and readers should therefore watch two numbers in sequence: what the billionaire tax actually collects, and whether the Texas comparison migrates from commentary into legislation.