Nobel Economists Back California Billionaire Tax; Ripple's Larsen Fights It

On September 19, six Nobel laureates in economics gave their backing to California's Proposition 40. The measure would impose a one-off 5% levy on the fortunes of billionaires residing in the state.

Proposition 40 will appear on the November 3 ballot with roughly $100 billion in play. Ripple Labs chairman Chris Larsen has already poured over $10 million into defeating it.

Nobel Economists Lay Out $2.3 Trillion Argument for Tax

Daron Acemoglu, Abhijit Banerjee, Peter Diamond, Esther Duflo, Paul Krugman and Joseph Stiglitz signed the letter. Each of them has won the Nobel Prize in Economic Sciences.

According to the economists, the state's richest 0.001% owned $700 billion in total a decade ago. That group's combined wealth has swelled to $2.3 trillion, equivalent to the yearly earnings of about 20 million California taxpayers.

The Nobel winners further computed that billionaires' state income tax payments came to 1.6% of the $1.4 trillion they added to their fortunes from 2019 to 2025. The economists said typical wage income faces a higher effective rate.

“A one-time tax of 5% on the wealth of California’s 250 billionaires would raise as much revenue as a 5% income tax on all Californian taxpayers: about $100 billion. The wealth tax would be modest relative to the gains made by billionaires, yet large enough to offset the federal cuts to Medicaid,” the letter read.

Acemoglu has previously taken on billionaires directly. In July, he dared Elon Musk to donate nearly $1 trillion by 2036. Musk responded that he would do something along those lines. Forbes puts Musk's net worth at $946.5 billion.

Ripple Chairman's Fight Against Proposition 40

Proposition 40 has also attracted organized resistance from the billionaires it targets. Fortune reports that Golden State Promise, an opposition committee, got $5 million from Larsen, with Ripple Labs contributing another $5 million.

Larsen also directed $10 million to Building a Better California, a political action committee set up this year to oppose the tax. Forbes estimates his net worth at $8.4 billion, meaning a 5% levy would cost him about $420 million.

Venture capitalist John Doerr gave $7.5 million to the same PAC. Sergey Brin, the fifth wealthiest person globally, moved a substantial portion of his assets out of California late last year. His total spending against the tax has reached $102 million.

In the meantime, Building a Better California has sponsored two ballot measures of its own: Proposition 41 and Proposition 42. Either of these, if it receives more votes than Proposition 40, would nullify the billionaire tax even should the tax also pass.