Given California’s well-deserved reputation for tax-and-spend policies, you won’t be surprised to learn that state government spending over the past decade has grown much faster than population plus inflation.

And that’s true whether looking at the spending financed directly by the state as well as overall spending (which includes spending financed by Washington for programs such as Medicaid).

I’m sharing this chart because it is very helpful background information when discussing the wealth tax that has been proposed for the not-so-Golden State.

I’ve already written three columns about this example of economic suicide – see here, here, and here.

But I feel the need to add a fourth edition in the series because Emmanuel Saez and Gabriel Zucman, two French-born (naturally) economics professors have a New York Times column defending the proposal.

Here are some excerpts, mixed with my commentary.

The proposed tax would be a one-time levy of 5 percent on billionaire wealth, spread over five years. …California is an ideal place to test this idea. The state needs money to fill a budget hole… The billionaire class in California includes roughly 250 households, a mere 0.001 percent of the state’s families. …From 2019 to 2025, California billionaires’ wealth grew an average of over 15 percent per year, while they paid, on average, just 0.26 percent of their wealth annually in state income taxes. Their income tax payments accounted for only 2.4 percent of California’s income tax revenue.

I have three quick comments.

First, as shown in the above chart, there is no “budget hole.” The idea that California politicians don’t have enough money is the foundational myth of the campaign for a wealth tax.

Second, if the Saez-Zucman numbers are correct, 0.001 percent of taxpayers already are paying 2.4 percent of the total income tax burden, so they’re already financing an enormously disproportionate share of state spending.

Third, it doesn’t matter if California income taxes are 0.26 percent of rich people’s wealth, just like it doesn’t matter that state income taxes are tiny when compared to the average person’s 401(k) and home value.

Here are some more passages from the Saez-Zucman column.

…a one-time 5 percent tax on the wealth of California billionaires…could raise nearly $100 billion in revenue for California. …Taking such a small bite out of billionaires’ exponentially growing tech wealth wouldn’t doom Silicon Valley because the value of California’s concentrated tech talent dwarfs the proposed wealth tax. Nvidia’s chief executive, Mr. Huang, who would be one of the biggest payers of the tax, said he would be “perfectly fine” with it. …It is too late for superrich Californians to flee the state to avoid the tax. If approved in November, the tax would apply to billionaires who were residents of California as of Jan. 1, 2026. Some affected taxpayers might have left between the ballot initiative’s introduction, in late October 2025, and the end of the year. But it is improbable that any significant number of billionaires fully cut ties with California in that short period.

I have only one comment about the above, but it’s a big one.

Specifically, many of California’s super-rich reportedly did leave, including the state’s three wealthiest people (the two founders of Google and the founder of Facebook).

What Saez and Zucman claim is “improbable” already happened. Not to mention that remaining billionaires (including the masochistic Mr. Huang) presumably would have a strong legal case against retroactive taxation.

I also want to debunk this image from the column.

According to the authors’ calculations, Mark Zuckerberg paid 27 percent tax on the income he received from 2019-2025.

They then want to imply he’s somehow benefiting from a tax dodge of 17 percent because his company reinvested some of its revenue.

Sensible and rational people understand that money used for investments is not profit. Unfortunately, Saez and Zucman don’t understand this elementary principle (actually, I suspect they do, but they’re pretending to be stupid in order to make inflammatory claims).

Last but not least, they want their readers to think the biggest tax dodge (zero percent) is that increases in Facebook stock are not treated like income.

However, Zuckerberg is being treated just like me and you. If our homes go up in value, that is not taxable income.

If our retirement accounts go up in value, that is not taxable income. And the same is true for anything else we own (cars, coin collections, etc).

And the reason those things are not treated as income is…brace yourself for a startling revelation…they are not income.

Income is the annual flow of money we receive for providing labor or capital to the economy.

We sometimes then use our income to buy things (home, stocks, bonds, etc). If those things rise in value, that’s an increases in our net wealth, not an increase in our income.

If folks on the left want to argue that we should tax wealth in addition to taxing income, we can have an honest debate about whether that’s a good idea or bad idea (I’ve explained many times – see here, here, here, here, and here – it is definitely not wise).

But when they deliberately confuse income and wealth when calculating tax rates, they’re not being honest. Or, in the case of our former president, they are too befuddled to know the difference.