Tax the Rich: A Failed Strategy — New York’s Millionaire Exodus and California’s Prop 40 Show the Same Dangerous Path
- Rex Ballard
- 1 day ago
- 5 min read
Everyone wants the wealthy to pay their fair share of taxes. By and large, that is how the U.S. and most state tax tables are designed to work. Despite this, “Tax the rich” remains the favorite slogan of progressive politicians from Albany to Sacramento. It sounds simple, moral, and painless — make the wealthy pay “their fair share” so everyone else can have more free services.
Reality is less romantic.
Two coastal experiments — one already underway in New York and one about to hit California voters this November — reveal the same hard truth: when states treat high earners as bottomless ATMs, the high earners leave, the tax base shrinks, and ordinary taxpayers are left holding the bag.
New York’s Real-World Results: The Golden Goose is Flying Away
The nonpartisan Citizens Budget Commission (CBC) of New York has documented the damage with cold numbers.
Between 2010 and 2022:
New York’s share of U.S. millionaires collapsed from 12.7% to 8.7% — the steepest decline of any state.
The absolute number of millionaires nearly doubled, but Florida quadrupled, Texas and California tripled, and the national total grew 184%.
New York dropped from 2nd to 4th place nationally.
In 2024 alone, the state lost a net 1,679 millionaire households.
These high earners (under 1% of filers) pay 44% of New York State’s personal income taxes and 40% of New York City’s. In 2022 they contributed roughly $34 billion.
Had New York simply maintained its 2010 share of millionaires, the state would have collected $10.7 billion more that year alone (and the city $2.5 billion more). Total “hidden cost” to taxpayers: nearly $13 billion in one year.
New York City already imposes the highest combined top marginal rate in America — 14.776%. New progressive leadership is promising even higher “tax the rich” surcharges. The CBC’s conclusion is blunt: there is no better way to fund needed services than to retain and grow millionaires — and New York is doing the opposite.
New York Needs More Millionaires, Fiscal Watchdog Says - The New York Times
California’s Prop 40: Doubling Down on the Same Mistake
On November 3, 2026, California voters will face Proposition 40 — the “One-Time Wealth Tax for State-Funded Healthcare, Education, and Food Assistance Programs Initiative,” better known as the Billionaire Tax.
Key provisions:
A one-time 5% tax on the net worth of individuals and trusts with more than $1 billion in covered assets (roughly 200 people).
Residency measured as of January 1, 2026 — making the tax retroactive.
Payment allowed over five years (with a 7.5% annual deferral charge).
90% of revenue for healthcare (Medi-Cal and related programs), 10% for K-14 education and food assistance.
Sponsored by SEIU-United Healthcare Workers West.
Supporters claim it will raise ~$100 billion. Opponents (including Governor Newsom) warn it will drive wealth out of the state even faster.
California already has the highest state income tax rates in the nation and relies heavily on its top earners. Prop 40 adds a pure wealth tax on top of that structure. The wealthiest Californians have already left the state. This includes the founders of Google, Facebook, and countless others who now call Texas and Florida their homes. When the wealthy leave California, they don't only take their tax base with them, they also take their considerable spending with them, and that hits hundreds of small businesses right in the pocketbook.
California Wealth Tax Push Leads Call for New Levies in Other States - Bloomberg
The Pattern Is Clear
Both states illustrate the fundamental flaws of pure “tax the rich” strategies:
High earners are mobile. Capital and talent move faster than politicians admit. Florida and Texas have no income tax and are winning.
The tax base becomes dangerously concentrated. When less than 1% of filers supply 40%+ of income tax revenue, losing even a fraction of them creates massive holes.
Revenue is volatile. Capital gains and paper wealth swing wildly. Budgeting on them is reckless.
Services eventually suffer. When the wealthy leave, the money for schools, hospitals, and roads leaves with them — or middle-class taxes have to rise to fill the gap.
Follow the money: Mapping millionaire migration across America - Big Think
What This Means for Shasta County and the North State
Shasta County already lives with the consequences of Sacramento’s high-tax, high-regulation model: expensive energy, housing shortages, businesses looking elsewhere, and constant pressure for more revenue.
Prop 40 would accelerate the same dynamic New York is experiencing. It would send the clearest possible signal that California is not a place to create or keep wealth.
The alternative is not “protecting billionaires.” It is recognizing that a healthy tax base requires people who create wealth to want to stay. Attracting and retaining high earners, entrepreneurs, and businesses is how you fund schools, roads, and public safety for everyone else.
Bottom Line
“Tax the rich” is easy politics and bad fiscal strategy.
New York has already proven the results: shrinking share of millionaires, billions in lost revenue, and a more precarious budget. California is now asking voters to run the same experiment with Prop 40.
Shasta Unfiltered’s position is simple: California should learn from New York’s failure instead of copying it.
Oh, and before you jump in saying that the California Wealth tax is temporary and will only hit billionaires - remember that history has a way of repeating itself — especially when politicians promise that a new tax will only hit “the rich.”
When the modern federal income tax was first imposed in 1913 after ratification of the 16th Amendment, it was sold as a modest levy that would fall almost exclusively on the wealthiest Americans. The original Revenue Act of 1913 imposed a 1% tax on incomes above $3,000 (about $95,000 in today’s dollars) for single filers and $4,000 for married couples, with a top rate of just 6–7% on incomes over $500,000 (roughly $12–14 million today). Less than 1% of the population paid any federal income tax at all. It was widely described as a way to “soak the rich.” Over the following decades—fueled by World Wars I and II, the Great Depression, and expanding government programs—the tax base broadened dramatically through lower exemptions, more brackets, and higher rates (peaking at 94% during WWII), evolving into today's system where most working Americans pay federal income taxes and the code has grown into thousands of pages of complex rules and deductions.
Another thing to remember is that the golden goose does not stay where it is treated like an ATM machine.
What do you think? Should California follow New York’s path, or chart a course that actually keeps wealth and opportunity here?
Share your thoughts in the comments or email contact@shastaunfiltered.com.
Sources: Citizens Budget Commission of New York (2025–2026 reports and Competitive NYS Tracker), Ballotpedia Prop 40 page, Tax Foundation analysis of the 2026 Billionaire Tax Act, California Secretary of State filings, CalMatters.
Images used under fair use for news commentary and criticism.
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