Here are three spooky California policy ideas that Utah must avoid.
1. Wealth Taxes
Soon, voters in California will have the opportunity to decide whether they want to levy a one-time 5 percent tax on billionaire wealth. Unlike conventional income taxes, which generally tax realized income, this proposal would tax accumulated wealth, including unrealized gains on assets that have never been sold.
Not only could this be considered an “uncompensated taking” that violates the Fifth and Fourteenth Amendments, but it also presents a simplistic view of how assets are valued. Asset prices can fluctuate dramatically and are influenced by interest rates and discount rates (the opportunity cost of capital, effectively).
The initiative in California is being justified by the false idea that the wealthy don’t pay their fair share in taxes. The reality is that the United States has an incredibly progressive tax system whereby the rich pay the majority of federal income taxes. While there are sophisticated strategies to avoid taxes, such as “buy, borrow, die,” the reality is that this strategy is quite rare compared to the total economic income of the top 0.01 percent of wealth holders.
Wealth taxes set a precedent that is fundamentally hostile to investors and entrepreneurs, pushing both capital and consumption away. If Proposition 40 passes in California, it may be the straw that breaks the camel’s back in terms of economic prosperity.
2. A state version of the National Environmental Policy Act (NEPA)
NEPA is a federal law that requires environmental review before certain projects can proceed. California has its own version of NEPA known as the California Environmental Quality Act (CEQA).
Rather than being used to protect the actual environment, the law has been weaponized by incumbent property owners and special interest groups to absolutely stifle new development. An analysis of nearly 500 appellate court decisions involving CEQA from 2013 to 2023 found that housing is the most frequent target of CEQA litigation.
CEQA lawsuits can be filed by organizations that conceal the identities of the individuals behind them, potentially compelling developers to produce expensive environmental impact reports, which cost anywhere from $200,000 to millions of dollars and take a year or more to complete.
This law, among other factors, has utterly suppressed housing development in California and has led to the second-highest home prices of all 50 states. In a recent op-ed, I highlighted the severity of the state’s housing shortage:
To put the affordability crisis into perspective, the average home in Utah costs approximately $533,000. Meanwhile, the median household income in the Beehive State is approximately $97,000. The numbers for California, on the other hand, are approximately $762,000 and $100,000, respectively. That means that just two states over, incomes are approximately the same, taxes are lower, and homes cost roughly 30 percent less.
While Utah has its own problems in terms of housing affordability, California shows what happens if bad policy is permitted to fester and suppress development decade after decade.
3. California’s Proposition 13
Many free-market advocates hate the concept of property taxation. If the government is taxing your property every single year, it feels like you don’t truly own anything. It is for this reason that many conservatives in California love Proposition 13, which suppresses the taxable value of property in the Golden State.
Rather than requiring properties to be reassessed annually at market value, Prop 13 generally limits increases in their taxable assessed value to 2 percent per year, except when ownership changes or new construction occurs. Since the ballot initiative was passed in 1978, home prices in California have appreciated at an annualized growth rate of 4.73 percent, more than double the 2 percent annual cap on increases in assessed property values for tax purposes under the law.
This has led to an enormous discrepancy between what newcomers and longtime residents pay in taxes. For example, there is a home in Los Angeles County that is valued at $2.3 million. In 2025, the owner paid approximately $3,000 in property taxes. If someone were to buy that home today, the annual property tax liability would be approximately $23,000. The resulting constraints on tax revenue have placed significant financial pressure on local governments, creating what has been described as a “fiscal straightjacket.”
While less tax is typically a good thing, the reality is that those residents still utilize public services, meaning that they are likely free-riding on new taxpayers. The solution to this dilemma is simple. Property taxes should not be arbitrarily levied as a percentage of property valuations, but rather anchored to the revenue needs of local governments, which is effectively what Utah already does.
Recently, there has been a lot of discussion about property taxes in Utah, and some have argued that we need our own version of Prop 13. The reality is that the Beehive State is already doing things the correct way, and frustration with property taxes likely stems from their salience rather than anything else. If people had to pay their income tax in one fell swoop, they would likely realize that it’s a worse form of taxation.
