Pandora’s box is an artifact of Greek mythology and the idiom “to open Pandora’s box” has come to mean that this action could start something that will cause unforeseen problems. A modern equivalent is, “to open a can of worms.”
California’s proposed billionaire ballot initiative would ostensibly impose a one-time tax of 5 percent on the net worth of the state’s billionaires. This is still far from a done deal, and until the initiative makes it through the ballot process and an actual law is passed, it is difficult to have a useful discussion of the potential impact.
Nevertheless, investors should be aware of the initiative and recognize that if it actually becomes a law, the unexpected consequences could be significant. One near certainty is, if this initiative actually comes to fruition, you can be sure that it will not be a one-time event and that it will probably be broadened. If you think this assessment is too pessimistic, you should review the evolution of the Federal income tax, that was initially billed as a small percentage of the income of the super wealthy.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
