Yesterday, @Scoresby made a post about a proposed retroactive wealth tax on billionaires in CA. The idea stirs a lot of stuff up, but a question I had is whether such a thing could even be legal.

The issue is greatly concerning to me, as a billionaire who lives in CA, so this morning I asked my friend Claude. Here's a lightly-edited response:

The constitutional question here is actually more interesting than most people assume, because the answer splits sharply between criminal and civil domains—and the civil side has some genuinely unsettling precedent.

The Criminal Side: Clear Prohibition

For criminal retroactivity, the Constitution is unambiguous. Article I, Sections 9 and 10 prohibit ex post facto laws, and Calder v. Bull (1798) established this means you cannot be punished for conduct that was legal when you performed it. You also can't retroactively increase penalties or change evidentiary rules to make conviction easier. This is bedrock. The Framers had fresh memories of bills of attainder and parliamentary overreach.

So no, they cannot make your past legal behavior criminal and prosecute you for it. Full stop.

The Civil/Tax Side: Disturbingly Permissive

Here's where it gets uncomfortable. The ex post facto prohibition has been consistently interpreted to apply only to criminal laws. Civil penalties, including taxes, operate under a different and much more permissive standard.

The leading case is United States v. Carlton (1994), where the Supreme Court upheld a retroactive amendment to the estate tax that was applied 14 months backward. The test they articulated is essentially rational basis: does the retroactive application have a legitimate legislative purpose furthered by rational means? That's a test the government almost always wins.

Earlier, Usery v. Turner Elkhorn Mining Co. (1976) upheld retroactive liability for black lung disease on mine operators, even for miners who had left employment years before the law passed.

The Court has gestured toward limits—suggesting that a retroactive law so harsh and oppressive as to transgress constitutional limitations on due process might fail—but they've never actually struck down a retroactive tax on this basis.

So Would This California Proposal Survive?

Probably not in its current form, but not for the reasons you might think.

The strongest challenges would likely be:

1. Due Process (substantive): A 5% wealth tax applied retroactively to a date before the law even passed is more aggressive than anything the courts have blessed. Carlton involved 14 months; this could involve longer periods and vastly larger sums. At some point, retroactivity becomes so severe it "shocks the conscience."
2. Takings Clause: The Fifth Amendment (incorporated against states via the Fourteenth) prohibits taking private property without just compensation. A one-time confiscation of 5% of all assets might be characterized as a taking rather than a tax—though the line between taxation and taking is notoriously murky.
3. Apportionment: Direct taxes must be apportioned among states by population (Article I, Section 2). A wealth tax is almost certainly a direct tax. This is why there's no federal wealth tax—the Sixteenth Amendment only removed the apportionment requirement for income taxes. But this is a state tax, not federal, so the apportionment clause doesn't directly apply. California's own constitution might have issues, though.
4. The mobility problem: Even if constitutional, the reflexive dynamics kill it. The announcement is the policy. By telegraphing the Jan 1, 2026 date, they've created a Schelling point for exodus. The proposal assumes assets are captive; they're not.

The Deeper Weirdness

What strikes me is how this illustrates transgressive value discovery in the political domain. The union isn't really proposing a viable policy; they're probing. They're testing what the enforcement landscape looks like, what elite response is, what coalitions form. The stated justification—"these folks just made sense" as a revenue source—is so nakedly instrumental it almost reads as parody. It's not even pretending to be principled.

This is POSIWID in action: the purpose of the proposal is whatever effects it actually produces. And what it produces is information about the political possibility space, regardless of whether it passes.

The retroactivity feature is the tell. It's designed to prevent the behavioral response that would otherwise nullify the policy. But that very design reveals the coercive logic at the core: we know you would leave if you could, so we're going to trap you. It's an admission that the tax lacks legitimacy sufficient to survive voluntary compliance.

References

Calder v. Bull, 3 U.S. 386 (1798).

United States v. Carlton, 512 U.S. 26 (1994).

Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (1976).

Epstein, R. A. (1985). Takings: Private property and the power of eminent domain. Harvard University Press.

Some notes:

• Even though the idea of retroactively taxing seems wrong, the example of retroactively taxing mining companies for black-lung damages feels fine to me. Or at least, not obviously not-fine.
• Transgressive value discovery is a term of art I made up to describe figuring out the value of something by transgressing and seeing how the world reacts to the transgression. Obvious application to price discovery in markets, but I actually made it up to explain something from Bolaño's 2666.
• POSIWID is this and is an idea worth being familiar with, if you're not.
• Reflexivity is another important concept (pdf), whose interestingness extends far beyond the original financial domain.

Also, I haven't checked these references, nor would I have the expertise to evaluate them even if I had checked them. So don't, like, go to court armed only with this information.