Research preview

The prospect of a 5 % wealth tax on billionaires in California has sparked intense debate among policymakers and market participants. With a roughly 28 % chance of passing, the measure could alter capital flows, asset pricing, and risk premia. This article examines the quantitative implications of such a tax, drawing on core concepts from applied probability, regression modeling, and out‑of‑sample testing. The Tax Mechanism and Immediate Market Impact A wealth tax levied annually on net assets above a high threshold forces the richest households to liquidate holdings or incur financing costs each year....