Two Economists Say Matching Texas Property Tax Rates Would Out-Raise Prop 40, Which Voters Decide Nov. 3

As California voters prepare to decide Proposition 40, the billionaire wealth tax, two economists have pitched a bigger target: the state's own property tax system.

Princeton's Owen Zidar and the University of Chicago Booth School of Business's Eric Zwick, authors of The Everywhere Millionaire, laid out the case in a recent New York Times op-ed. Their argument: if California taxed homes at Texas-like rates, it would raise more over time than Prop 40's one-time levy. Voters decide the measure Tuesday, Nov. 3.

The comparison

Prop 40 would impose a one-time tax equal to 5% of the assets of California residents worth more than $1 billion. The union backing it says it could raise $100 billion to offset federal cuts to health spending. After administrative costs, 90% of the money would go to health care and 10% to education and food assistance.

The measure's official estimate projects tens of billions of dollars over several years. Economists who helped draft it estimate about $100 billion from 2027 through 2031, assuming 10% avoidance.

Zidar and Zwick say California homeowners pay an average property tax rate of about 0.8%. Texas homeowners pay about 2%. If California matched Texas, they estimate, residential property tax revenue would more than double, and home prices would ease by around 13%.

They call Proposition 13, the 1978 measure, "the original sin underlying California's tax structure." It capped property taxes at 1% of assessed value, limited annual increases to 2%, and allows reassessment to market value only after a sale or substantial renovation. "Getting rid of it would be a more efficient and durable way to make the rich pay their fair share," they wrote.

What their numbers do and do not show

The economists did not put a dollar figure or timeline on the increase, and the higher rate is a thought experiment. It is not on the Nov. 3 ballot. Repealing or rewriting Prop 13 would take a separate act of voters or lawmakers.

The $100 billion figure that appears alongside their estimate is California's total statewide property tax revenue for fiscal 2024-25, which ended June 30, 2025. Of that, $53.5 billion went to schools and $46.5 billion to counties, cities and special districts. That total covers all property, not just homes, so it is not a residential-only baseline.

Another 2024 calculation of effective rates on owner-occupied homes put California at 0.70% and Texas at 1.40%, using a different measure. That is still a doubling, but at lower rates than the economists' 0.8% and 2%.

The two taxes also work differently. Property taxes are recurring and fund local schools and governments. Prop 40 would collect once, for state programs.

Where the economists agree with Prop 40's critics, and where they don't

The economists are not endorsing the billionaire tax. "It is simply not possible to fund the state's needs by leaning on a few hundred people, as politically appealing as that may be," they wrote.

Prop 40's opponents have argued the tax would hurt economic growth and startups, force founders to sell large pieces of their companies, and push wealthy residents out of state, costing California revenue over time.

Supporters see it differently. They point to the AI boom and say California's ultra-rich would still rank among the world's wealthiest after paying. The union behind the measure says the money is needed to blunt federal health cuts.

Fortune notes that getting rid of Prop 13 would not go down well with voters, as many would suffer big increases on their property taxes. It also notes that property taxes in Texas have set off their own voter revolt during this midterm season.

How California got here

Prop 13 passed during the late-1970s tax revolt that preceded Ronald Reagan's election. Afterward, the state had to find other ways to raise revenue and relied more on taxing incomes, including capital gains.

California now has the most progressive income tax structure in the country, with a top marginal rate of 13.3%. Combined with federal rates, the top rate can exceed 50%. The top 1% of earners provide up to half of state revenue, which leaves the budget swinging with stock market returns.

The economists also note that the very wealthy often report little income. They borrow against assets to fund their lifestyles and avoid some taxes.

What comes next

Prop 40 goes to voters Tuesday, Nov. 3. The Prop 13 question the economists raise is not on the ballot. Any attempt to change it would need its own campaign, and would face the voters who approved the 1% cap in 1978.