Analysis Projects $65.5 Billion in Lost Investment, More Than 230,000 Fewer Jobs, Nearly $1,700 Less Income Growth
SACRAMENTO, CA / ACCESS Newswire / October 9, 2026 / A new Pacific Research Institute study released today finds that average Californians could ultimately bear significant economic costs from a wealth tax – through fewer job opportunities, weaker income growth and increased fiscal pressure that could eventually reach their own tax bills.
The study, “You’re Next: How a California Wealth Tax Could Reduce Investment, Jobs and Income – and Increase Pressure for Broader Tax Hikes,” estimates that a California wealth tax as envisioned in Prop. 40 could result in:
- $65.5 billion less venture-capital investment;
- More than 230,000 fewer jobs created;
- Almost $1,700 less income growth for the average family;
- A state economy that is 3.4% smaller relative to baseline growth over five years; and
- $5 billion to more than $7 billion annually in lost state revenue from slower growth.
“A wealth tax may start with billionaires, but the economic consequences don’t stop there,” said Dr. Wayne Winegarden, PRI senior fellow in business and economics and the study’s co-author. “When investment leaves, there’s less money to launch businesses, create jobs and raise incomes. The billionaire writes the check, but average Californians may pay the economic price.”
Impact on Investment in California
California attracted 60 percent of all U.S. venture-capital investment from 2021 through 2025, averaging $158 billion annually. Echoing venture-capitalists, including Mark Cuban, who say a wealth tax could guide future investment decisions, PRI’s study estimates that a wealth tax could reduce California investment by $65.5 billion as investors and entrepreneurs change where they invest, build companies, and locate businesses.
Impact from One-Time Revenue Growing State Spending
When the temporary tax revenue a wealth tax generates runs out, government must find new revenue sources to avoid major cuts.
Prop. 40 illustrates the issue. The measure would impose a one-time 5 percent wealth tax to support new spending programs that could continue after the temporary revenue disappears. This comes as California faces projected annual deficits exceeding $10 billion.
PRI’s analysis modeled a hypothetical one-percent, across-the-board increase in the state’s personal income tax brackets as a way lawmakers may find new revenue to protect the higher spending a wealth tax will facilitate. Combined with the modeled wealth-tax effects, PRI estimates that this scenario would result in:
- Average-family income dropping by nearly $3,000,
- Job growth falling by nearly 400,000, and
- Economic growth declining 5.8 percent relative to baseline growth over five years.
“Wealth tax proponents promise that only billionaires will pay,” said Winegarden. “But when investment falls, growth slows and one-time revenues disappear while higher spending continues, government faces pressure to find the next source of money. Today, it’s billionaires. Tomorrow, you could be next.”
The Pacific Research Institute (www.pacificresearch.org) champions freedom, opportunity, and personal responsibility by advancing free-market policy solutions.
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SOURCE: Pacific Research Institute
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