[Blog] In the context of Budget 2026-2027: A nod to California's proposed Billionaire Tax

On 26 May 2026, The New York Times featured an article entitled "The Case for California's Billionaire Wealth Tax".

The article was written by two renowned economists, Emmanuel Saez and Gabriel Zucman. In their op-ed, they aver that the Californian tax system is indubitably flawed as it "allows the ultra-wealthy to pay a lower effective tax than everyday middle-class workers". To correct this imbalance, they propose that an unprecedented one-time wealth tax of 5% be imposed on the "worldwide net worth" of anyone possessing $1 billion and above. The levy should be spread over a period of five years.

The overall objective is to collect roughly some $100 billion to be used to fund critical public goods such as reviving the "failing" health system, improving educational programmes, upgrading aging public infrastructure, providing food safety nets, and so on. In so doing, there is an equitable sharing of the burden that ensures economic fairness and social justice.

In their proposal, the economists have also addressed the risk of capital flight from California. They offer an institutional safeguard by proposing that this tax should be applicable retroactively to any billionaire residing in California since 1 January 2026. This "legal lock" will prevent any billionaire from simply packing their bags and leaving — "leve pake aller".

Hailed as a "quick shock model" and a "high-stakes raid on the ultra-rich", the proposed billionaire wealth tax could serve as a fiscal blueprint for cash-strapped regions in any part of the world. However, the proposal faces some practical hurdles.

Firstly, as every bold economic idea hits a wall, it faces stiff resistance from oligarchs. Tech giants are already ganging up with corporate lawyers to mount aggressive campaigns against this redistributive agenda.

Secondly, it has to be voted on by the electorate in November and, thirdly, the retroactive clause can be challenged in the Supreme Court regarding its constitutionality.

Notwithstanding the above, the proposed California Billionaire Tax is not so dissimilar to the Fair Share Contribution proposed by the Mauritian Government in the last Budget for a period of three years. Unfortunately, it was torpedoed and withdrawn in haste under systemic pressure. According to Joanna Bérenger, the Government has concomitantly lost some Rs 750 million, which could have been used for social housing projects.

Kugan Parapen, on the other hand, advocates for a deeper, permanent wealth tax on high earners, targeting not just immediate income but also accumulated assets. This structural reform would enable the funding of public goods, the reduction of fuel prices and the removal of VAT on essential products used by ordinary people.

Across the globe, the obscene accumulation of extreme wealth is being questioned. Ignoring the widening chasm of extreme wealth inequality is no longer politically viable.

Azize Bankur