California is testing the first tax that turns wealth into a state-granted concession. If it passes there, it can pass anywhere.

When societies enter prolonged fiscal stress, they reach for the same tool: redefining ownership. California just crossed that line with a ballot initiative proposing a retroactive wealth tax on anyone who lived in the state in 2025. The stated target is billionaires. The real impact reaches far lower.

The move is the convergence of three forces: a state unable to fund its own health-care system, unions desperate to preserve their benefit packages, and academics who openly argue that private wealth should act as a permanent fiscal shock-absorber. The sequence is predictable. First you hit the top. Then you widen the base. History is monotonic.

The core isn’t “social justice.” It’s arithmetic. And incentives.

The mechanism that kills property

The difference between income tax and wealth tax is trivial but decisive. Income is flow; wealth is stock. Once the state taxes the stock, the logic flips. You no longer own your assets. You temporarily operate them—so long as you can pay the renewal fee.

California’s proposal works like this:

• The state annually appraises every asset: real estate, realized and unrealized equities, savings, valuables, illiquid holdings.

• The tax applies to total value, not sales, profits, or transactions.

• If you lack liquidity, you sell—at a loss if needed—to meet the bill.

It’s the conversion of ownership into compulsory leasing.

And once a mechanism like this is accepted, it never goes back in the box. U.S. fiscal history is blunt. In 1913, the federal income tax targeted the top 2 percent. Today it hits almost everyone who produces. Taxes never contract. They metastasize.

The pretext: public health

The official justification is Medi-Cal’s deficit—California’s version of Medicaid. The shortfall is estimated at over $6 billion. Extending coverage to residents without legal status added costs the state never budgeted for. The numbers broke.

Politically, creating an “exceptional” tax is easier than admitting decades of mismanagement. Instead of reforming the system, you sacrifice someone else’s balance sheet. The pattern is ancient.

But even if the wealth tax works perfectly, the revenue only patches a short interval. After that, the system returns to the same structural failure. The measure doesn’t solve the cause. It delays the collapse.

What’s actually at stake

Wealth taxes are never about billionaires. They’re about precedent. Once the state can confiscate already-taxed value, the next step is ordinary assets: homes, savings, small-investor portfolios.

It’s the inevitable logic of systems that consistently spend more than they collect. When the flow breaks, they go after the stock.

The question isn’t whether billionaires deserve it. The question is whether society accepts the end of property as a category. If the state can reprice your balance sheet annually and demand payment for what you already bought, property no longer exists. The vocabulary changes; the effect doesn’t.

What comes next

If this initiative advances, expect three moves at once:

• Capital flight before the vote.

• Years of litigation.

• Federal pressure for a similar model—already endorsed by Elizabeth Warren and Bernie Sanders.

The threat isn’t California. The threat is normalization.

The opportunity cost

Meanwhile, the real issue—the American health-care system—remains untouched. Nothing in the proposal confronts hospital costs, drug-pricing schemes, perverse billing incentives, regulatory capture, or the absence of real competition. Taxing wealth is easier than fixing the machinery.

It’s politics substituting for management.

The conclusion no one likes

These proposals always arrive dressed in moral language. They always promise to hit only “the very rich.” They always pose as exceptions. And they always become permanent.

Economic history is unromantic: once the state learns how to tax assets, it never unlearns. And there is always another crisis, another shortfall, another pretext.

Relax. It’s only the end of private property.
And if you’re paying attention, it’s also the time to strengthen exposure to assets that don’t require state permission to exist—maybe Bitcoin.