Emmanuel Saez & Gabriel Zucman

While SEIU-UHW supplied the signatures and political muscle for Proposition 40, the intellectual architecture belongs to UC Berkeley economist Emmanuel Saez, his longtime wealth-tax collaborator Gabriel Zucman, and tax law professors Brian Galle, David Gamage, and Darien Shanske. Saez has spent his career arguing that extreme wealth concentration must be taxed at the source, and he openly describes Prop 40 as a template other states can copy.

The steelman of their drafting is that they solved every obvious avoidance path in advance: a one-time 5% snapshot rate tied to January 1, 2026 residency to deter post-announcement flight, a real-estate exemption to neutralize Prop 13 homeowner backlash, a $10 million Roth IRA threshold aimed squarely at mega-Roth shelters, and a 60-day Sacramento Superior Court to California Supreme Court fast lane so facial constitutional challenges are resolved by November 1, 2027.

Where their design crosses from anti-avoidance into coercion is Section 5033(c)(3)(C), the valuation rule for privately held businesses. While publicly traded shares (including dual-class shares at public companies) are valued at December 31, 2026 market price, private companies default to GAAP book value plus 7.5 times average annual book profits multiplied by the higher of the founder's economic stake or voting control — so a startup founder with 10% equity and 60% voting rights is presumed to own 60% of the firm, with certified appraisers facing personal penalties of up to 4% if the Franchise Tax Board disagrees.

As their own section-by-section explainer confirms, this was not a drafting error. They knew the voting-control floor and book-plus-7.5x-profits formula could tax illiquid founders on far more than they could realize in a sale, and they built it anyway to establish the legal precedent that the state can define valuation by fiat, apply it retroactively to a snapshot date, and penalize independent appraisers who push back.