California’s wealth tax will fail, but not because wealth taxes are bad. It will fail because of the loopholes written into the statute itself. That’s the missing lesson in Allysia Finley’s “A Lesson on Wealth Taxes From Charles Dickens” in the Wall Street Journal, which leans on the 1696 window levy to warn that taxing billionaires will backfire through avoidance and economic damage.
Finley’s Dickens comparison sounds tidy: a progressive tax on a rough proxy of wealth backfired in the eighteenth century, so wealth taxes will backfire now. The analogy inverts on inspection.
The window tax hit a physical, immobile, observable base — windows in a building. If you wanted to dodge it, you had to brick up real holes in real walls, then live with the dark, sickly rooms that followed. Landlords did exactly that. Children got scurvy. The tax was simple to assess and hard to avoid, which is why the harm landed on tenants: the building could not be moved, so the squeeze fell on the people inside it. Rent went up. The rooms went dark.
A modern wealth tax hits a financial, portable, fungible base — shares, bonds, business interests, private equity stakes. You cannot board up a bank account. You cannot brick up a stock portfolio. The mechanism that killed the window tax was the ability to physically alter a building to avoid the charge. That mechanism does not exist here.
California’s statute writes the exit door into the law. It exempts real estate. It snapshots net worth on a single date — December 31, 2026 — letting billionaires time the market. And it lets the taxpayer simply leave the state. That isn’t avoidance. It is the statute’s own architecture. A tax designed with the loopholes built in cannot indict wealth taxes as a category; it indicts the drafters.
Finley admits the window tax “was regressive in practice” because landlords passed it on to tenants. She then predicts the wealth tax will be regressive too — billionaires flee, everyone else pays higher state taxes. That is the same diagnosis, applied twice. If regressivity is the harm, the cure is a tax that cannot be dodged — not a refusal to tax wealth at all. Dickens railed against the window tax because it hurt the poor while pretending to help them. The California statute does the same thing, only faster.
I’ll concede one point. Any tax on a movable, hard-to-value base invites avoidance, and eighteenth-century window-tax assessors did indeed spend their careers arguing about what counted as a window. A poorly designed wealth tax invites the same spectacle. The question is design.
So design one that works. Drop the real-estate exemption so wealth held in mansions counts the same as wealth held in equities. Tax global net worth annually above a high threshold — five billion, perhaps — so the base is too large to relocate in a single calendar year. Set valuation rules in statute, not in appraisal disputes: publicly traded securities at year-end market price, private holdings at the most recent arm’s-length transaction, with anti-fraud penalties measured against the taxpayer’s own filings. Pair the wealth tax with a payroll-tax cut for workers earning under $150,000 so the burden moves up the income distribution rather than across it. Use the revenue to fund the public services the rich use but rarely pay for — courts, transit, clean water, the safety net that catches everyone when the market doesn’t.
A tax on wealth, not a tax on windows. The Dickens lesson isn’t “don’t tax wealth.” It’s “don’t build a window tax and call it a wealth tax.” California is doing the second. The first is still on the table.