It’s not just the 1 percent — the socialists will soon be coming for your money, too 

Progressives in the U.S. are eager to tax the rich. But who, exactly, is considered rich?  

Here’s the reality: feverish socialists will not be content to just grab the wealth of the top 1 percent. They are playing a bigger game. 

Robert Reich gives a hint of what is coming. The former Labor secretary has teamed up with the SEIU’s United Healthcare Workers West, a labor union, and Emmanuel Saez, a leftist Berkeley economist, to put a wealth tax — the nation’s first — on California’s 2026 state ballot.

The measure would levy a 5 percent tax on all the assets and property of billionaires living in the state this year. Reich claims that “the California proposal is a one-time-only tax and would be levied exclusively on billionaires’ current net worth in 2025.”  

He denies that the tax would drive the richest Californians to flee the state, arguing that “even if they decide to move to the Virgin Islands, they’ll still be liable for 5 percent of their wealth in 2025.” Reich also claims that wealthy people would not be deterred from moving into California, since the tax would only apply to billionaire-produced income in 2025. And, he emphasizes, it is a one-time tax. 

Is he kidding? When has any tax ever proved to be temporary?

The telephone excise tax was introduced into the U.S. in 1898 as a temporary measure to finance the Spanish-American War. It wasn’t repealed until 108 years later.

The federal gasoline tax was passed in 1932 to help get us out of the Great Depression and was meant to expire in 1934. It never went away.   

More relevant: A temporary tax on gasoline in California was implemented in 1923 to fund highway construction. It remains in place today as a permanent source of revenue. 

Reich and his merry money confiscators will be crisscrossing the state to line up the roughly 874,000 signatures needed to put the proposal on the November ballot. Will they succeed? Absolutely! California is deep blue, the SEIU will send its troops into the field, and surveys show Democrats overwhelmingly favor taxing the rich.

Plus, Reich is cleverly claiming the money collected — from a mere 200 billionaires! — will mainly go toward funding California’s Medicaid recipients. That sounds worthwhile, except that Medicaid is crashing because 1.7 million illegal immigrants are now enrolled. That is 11 percent of California’s total, at a cost of roughly $10 billion.

The rising cost of caring for undocumented residents is one of the reasons Gov. Gavin Newsom (D) has produced a major budget deficit. One analysis showed that California will spend 28 times more on health benefits for illegal aliens in the coming year than on law enforcement.

Reich blames President Trump and Republicans in Congress for a looming “$100 million hit” to California’s Medicaid program, because of reforms included in Trump’s big beautiful bill passed earlier this year. It is not true — those reforms were meant to take Medicaid back to its intended purpose of serving those unable to care for themselves, not able-bodied men without dependents or people in the country illegally.

Here is what will happen: The proposal will pass, and the measure will be tangled up in the courts for some time. California’s billionaires will move elsewhere and challenge the state’s ability to tax them retroactively. Once enacted, the wealth tax will not raise the promised revenues. How do we know? Because wealth taxes never live up to expectations. 

France instituted a wealth tax in 1982. It was expected to generate substantial revenues. It raised only 2 percent of GDP on average. More than 60,000 millionaires left France and the program generated administrative costs of about 15 percent of the revenues collected. Afterward, analysts concluded that the tax cost France more than it delivered; it was abolished in 2017. 

Germany and Sweden had almost identical experiences.   

What happens if California follows a similar path? Since Democrats in the Golden State appear unable to manage a budget or stop handing out benefits they cannot afford, they will eventually lower the ceiling of who pays the wealth tax, roping in those with a net worth perhaps of $500,000, and then maybe $100,000, until — surprise! — every local deli owner and car dealer is in the progressives’ crosshairs.  

At that point, California residents will cry foul. Perhaps they will even elect a Republican governor who campaigns on increasing the state’s wealth, not just redistributing it.  

California is not the only blue state suffering from fiscal problems. While red states like Kentucky, Missouri and Kansas have been lowering taxes, blue cities and states struggling to close budget holes are rushing to jack up tax rates.

In New York, for instance, Mayor-elect Zohran Mamdani has proposed to hike the personal income tax rate on residents making $1 million or more and increase the state’s top corporate tax to 11.5 percent from its current maximum of 7.25 percent. He thinks this will raise tax revenues by 11 percent.

High-income New Yorkers are already the highest taxed in the nation; with the proposed changes, large corporations in the city would also pay the highest rates in the U.S. 

And Mamdani won’t stop there. Those increases won’t pay the tab for the goodies he promised during his campaign — free buses, free childcare and all the rest will cost far more than he can extract from New York’s top 1 percent, which includes only 34,000 filers.

Those few individuals provide 40 percent of all the city’s income tax revenues. The increase would hike their share to more than 60 percent. At some point, those wealthy folks who remain will not be able to shoulder the progressive burden. At that point, higher taxes will be levied on the middle class.  

Our country has prospered by providing individuals with the opportunity to get ahead and to enjoy the fruits of their success. Consequently, we have out-performed and out-grown every developed country on earth.

We must not allow today’s socialist fever to wreck the American dream. 

Liz Peek is a former partner of major bracket Wall Street firm Wertheim and Company.