Matthew Lilley: A bunch of Nobel Prize-winning economists have endorsed California's proposed billionaire wealth tax. I can't oppose them on authority. But I know some academics who can.

He is a lecturer at The Australian National University. This is his This is his Twitter thread.

"Acemoglu (2001) v. Acemoglu (2026)

Colonial Origins: "Protection against expropriation risk is extremely important for long-run prosperity."

Also: "Anyway, here's a 5% levy on the existing property of one narrowly defined group."
It's a one-off. I pinky promise.
 
Apparently the lesson of Colonial Origins was credible property rights are important until the property crosses ten figures.

The coefficient on expropriation risk: enormous.

 

The coef when the taxpayer owns Nvidia stock: Appendix B, Vibes

Diamond (1971) v. Diamond (2026)

Diamond–Mirrlees: Preserve production efficiency. Don't distort productive choices when other tax instruments exist.

Prop 40: tax the assets of people who own lots of productive capital?

Professor Production Efficiency: "Sounds good." 

Banerjee & Duflo (2007) v. Banerjee & Duflo (2026)

The credibility revolution: Stop waving your hands about giant ideological questions. Find something you can identify. Run the experiment. Measure what happened.
 
And therefore, naturally: California should impose a 5% wealth tax.

The causal chain:
1. Randomize remedial tutors in Mumbai and Vadodara.
2. Observe a 0.28σ rise in test scores.
3. ???
4. Tax Jensen Huang's equity.
 
Thousands of economist-hours teaching the profession to decompose huge policy questions into narrow ones with credible identification.

Then the ballot proposition arrives:

"No RCT necessary for this one, lads. Pre vs post comparisons in an AI boom are fine."
 
Krugman (1991) v. Krugman (2026)

New Economic Geography: Firms, workers and capital respond to incentives in deciding where to locate; those choices can shift equilibria.

Location is endogenous. Agglomerations aren't laws of nature.
 
But then for California:

"Yes, location incentives exist. Yes, mobile capital exists. Yes, equilibria can shift. But Silicon Valley will obviously be fine."

Location is endogenous, but apparently not that endogenous.
 
Truly, the most robust result in modern economics is that, as ideology grows large, every theorem acquires a people-who-are-richer-than-me exception.
 
(If you don't like the jokes, don't blame me, blame my co-author GPT. He did all the work)."