Before California, France tried a wealth tax. Macron repealed it after rich people fled the country instead of paying

In November, Californians will vote on the state’s proposed tax on billionaires, which, if passed, will slap a one-off 5% levy on the total wealth of residents worth more than $1 billion. Critics have warned that such an imposition will spark capital flight as wealthy people decide to simply uproot, as Google founders Larry Page and Sergey Brin have already started to do. A look across the Atlantic, where another broad wealth tax experiment was implemented across two decades, suggests these concerns might not be completely unfounded.

In 2018, less than a year into his tenure as president of France, Emmanuel Macron delivered on a landmark campaign pledge to abolish France’s “Solidarity Tax on Wealth,” known as the ISF. It was a progressive levy that targeted all assets, from real estate to stocks and art holdings, worth more than 1.3 million euros, approximately $1.5 million.

At the time, the act seemed to defy French political gravity. The tax rule had been in place almost continuously since 1982, when leftist President François Mitterrand imposed it to tackle wealth inequality. His successor, Jacques Chirac, briefly abolished it in 1986, but Mitterrand expeditiously revived it in 1989 upon his return to office.

The wealth tax fits with an established political identity in France that has traditionally eschewed elites and the ultrawealthy, to the point that, early in his term, Macron, a former investment banker and pro-market-reform advocate, was labeled the “president of the rich.” Evidence of the wealth tax’s benefits was mixed at best, and France had been in sore need of reform. It’s a cautionary tale for California and other jurisdictions considering higher taxes on the wealthy.

From 2000 to 2017, around 60,000 millionaires opted to leave the country, the Financial Times reported at the time, causing dents in state revenues from income and value-added taxes as well as the wealth tax. One estimate put France’s total capital flight between 1988 and 2007 at 200 billion euros owing to the policy, potentially dragging GDP growth down an average of 0.2% each year.

Macron framed the end of the wealth tax as a long-awaited boon to business and job creation. His administration retained a tax on assets worth over 1.3 million euros that only targeted property, arguing that excluding financial wealth would encourage more investment elsewhere in the economy, with Finance Minister Bruno Le Maire quoted as saying in 2019 that “overtaxing capital” had led to “more investors and creators of wealth leaving.”

Scrapping the wealth tax succeeded by some measures, with returns of wealthy taxpayers increasing slightly in the years following reform. But while the presence of a long-standing broad wealth tax might have squeezed investment, it is unclear whether its absence has done much to help French citizens beyond the wealthiest households. Its removal has likely contributed to higher wealth inequality, researchers at France Stratégie, an independent government advisory body, found in a 2020 report. The very wealthiest French households saw incomes rise by 27.5%, while the country’s median income rose by only 2.5%. And while the wealthy enjoyed greatly reduced tax burdens, low-income earners actually had to contend with higher social security tax rates, resulting in more expensive levies.

Other studies in recent years have come to similar conclusions, as the reforms directed significantly higher gains toward employed taxpayers, while retirees and the unemployed, reliant on social services, saw smaller benefits or even losses.

Wealth inequality remains a concern in France, with around half of the nation’s wealth concentrated in the hands of its richest 10%. As Macron prepares to enter his last year in office, amid a growing debt crisis and three government collapses in the span of a year, that deepening divide has prompted what might have been unthinkable at the beginning of his term: increasingly loud calls from Mitterrand’s political descendants in the Socialist Party to reinstate a wealth tax.

Whether California would face the same issues is unclear, given the one-off nature of the state’s proposed tax. Progressive politicians, and even a few billionaires, have backed the measure, arguing it will help reduce inequality and fund critical services. If passed, 90% of the tax revenues would go toward the state’s Medicaid program, and the rest to food assistance and public education. With California’s wealth inequality ranking among the worst in the nation, voters might need more persuasion to shoot down the tax.

This story was originally featured on Fortune.com