Jessica Tarlov Says Billionaire Taxes 'Fail' as California's Prop 40 Trails

Jessica Tarlov said Thursday that billionaire taxes do not work. The idea drew the backing of California's Democratic Party this year, but she argued that wealth taxes drive the rich away and bring in little money.

Tarlov is a Fox News co-host and Democratic strategist, and she made the case on Raging Moderates, the podcast she hosts with NYU professor Scott Galloway. Two days earlier, California voters had turned against Proposition 40, a one-time tax on billionaires. The vote came even as Democrats swept races across the country.

"But the problem with billionaire taxes is they fail," Tarlov said. "Look at all the wealth taxes across Europe that they've had to get rid of because people leave and they don't even generate money from it."

California's Billionaire Tax Vote

Proposition 40 would have placed a one-time 5 percent tax on the net worth of about 200 California billionaires, with the revenue going to health care and education. With about 60 percent of ballots counted, 55.6 percent of voters opposed it, CalMatters reported. Proposition 42, a competing measure that would prohibit the state from taxing financial assets, private businesses, pensions and other forms of wealth, and would nullify Proposition 40 if it got more votes, was passing with 54.3 percent.

The measure split California Democrats. It was sponsored by the Service Employees International Union-United Healthcare Workers West and endorsed by the California Democratic Party and the California Federation of Labor Unions. Governor Gavin Newsom opposed it, as did the California Teachers Association and Planned Parenthood of California. Opponents spent $316.7 million to defeat it and to pass the competing measures, according to CalMatters.

Newsom's argument against it was close to Tarlov's. At a Bloomberg event in San Francisco, he said the tax would erode the state's tax base as the ultrawealthy left.

What the Europe Record Shows

Tarlov's claim that the taxes raise no money is disputed. In Switzerland, the wealth tax brings in about 4.3 percent of total tax revenue. In Spain it brings in 0.6 percent, and in Norway 1.5 percent, Euronews reported, citing OECD data. Economists Emmanuel Saez and Gabriel Zucman have argued that Europe's wealth taxes failed because of policy choices: low exemption thresholds, Brookings summarized. In their view, that is not proof that such a tax cannot work.

Popular Message, Unpopular Measure

Taxing the rich is popular as an idea. Supporting a specific measure is a different matter. In a Pew Research Center survey taken January 20-26, 61 percent of U.S. adults said the feeling that some wealthy people do not pay their fair share bothers them a lot.

Proposition 40 lost support over the course of the campaign. A September UC Berkeley Institute of Governmental Studies poll showed 45 percent in favor and 42 percent opposed. A later Berkeley IGS poll found 42 percent of voters backing it and 50 percent opposed, KQED reported. KQED added that a Public Policy Institute of California poll, taken October 16-22, found the measure short of the majority it needed to pass.

Galloway described the same gap on the show. "Essentially affordability populism wins, but wealth tax populism is harder," he said. "And so voters like take on billionaires, but balk at specific what feels like class warfare against them."

Tarlov's Case for the Middle

Tarlov did not reject populism. She said she still holds a grudge over how Bernie Sanders talked about Hillary Clinton and Donald Trump as two sides of the same coin in 2016. But she credited him, saying his framing of "the elites versus the everyday, you know, Joe's and Jane's is definitely spot on."

She placed the wealth tax on the other side of a line she drew around what helped Democrats win on Tuesday. "And we know that economic populism is what works. We also know that some degree of cultural conservatism, if you wanna call that on voter ID, transgender athletes, is also necessary to be able to win," she said.

Galloway agreed. He described the wealth tax as "Tickling sensors and ending up with less money to enact the policies that we claim are important to us."

The California result sharpens a question the incoming Democratic House majority will face: whether "take on billionaires" remains a slogan or becomes a bill.

What Happens Next

California counts slowly, and the final Proposition 40 margin is still being tallied. The union behind it has said it will try again in 2028 if legislators fail to address healthcare funding cuts.