California’s Proposed Billionaire Wealth Tax Sparks Business Exodus Warning
California’s upcoming Proposition 40 would levy a 5% net‑worth tax on billionaires, prompting entrepreneur Eric Schiffer to warn that the measure could trigger a mass exodus of business leaders. The tax may cost the state up to $1 billion in income‑tax revenue and could ripple into job losses and r…
By Felo News Desk · Published
California voters face a high‑stakes decision on Proposition 40, a proposed billionaire wealth tax that would impose a one‑time levy equal to 5% of net worth on residents with fortunes exceeding one billion dollars. If approved, the tax would take effect in 2026, with payments due in 2027 and potentially spread over five years.
Entrepreneurial Concerns Over a New Wealth Tax
Eric Schiffer, chairman of the family office Patriarch and CEO of Reputation Management Consultants, has cautioned that the measure could spark a “giant sucking sound” of business leaders leaving the state. Schiffer, who works with several billionaire clients—including some based in California—said many are unhappy with the proposal. “Why would anyone stay if they have spent their life building wealth that they were already taxed on?” he told FOX Business.
Schiffer argues that the tax would not only affect the billionaires themselves but also the companies they run, the employees they hire, and the broader economy. He warned that the loss of high‑profile entrepreneurs could reduce California’s tax revenue, job creation, and investment inflows.
Proposition 40: What It Would Do
Proposition 40 would target California residents who, as of January 1, 2026, have a net worth of at least one billion dollars. The tax would be a one‑time payment of 5% of that net worth, with the possibility of spreading the payment over five years at an additional cost. Real estate, pensions, and retirement accounts would generally be excluded.
The measure has the backing of the California Democratic Party, while Governor Gavin Newsom and Republican gubernatorial candidate Steve Hilton have expressed opposition. The proposal is also supported by the Billionaire Tax Now coalition, which has staged rallies and public sign‑in events across the state.
Potential Economic Fallout
California’s nonpartisan Legislative Analyst’s Office (LAO) estimates that some billionaires may choose to relocate in response to the tax, taking with them the income‑tax revenue they currently generate. The LAO projects that such behavioral responses could reduce state income‑tax revenue by up to $1 billion per year. However, the tax is also expected to generate tens of billions of dollars over several years.
Schiffer warned that the exodus could have a cascading effect. “If entrepreneurs relocate, the state could lose businesses, jobs, investment and tax revenue,” he said. He also suggested that the tax could pave the way for similar levies on individuals with smaller fortunes, potentially affecting those worth hundreds of millions.
Broader Political Context
Representative Ro Khanna, a Democrat from California, has championed the wealth tax as a means to preserve health care for working‑class Californians. He has criticized the “Sacramento establishment” and lobbyists who oppose the measure. In contrast, business leaders like Mark Cuban have argued that many billionaires are “cash poor, stock rich,” meaning a large portion of their wealth is tied up in company shares rather than liquid assets, which could complicate tax payments.
Schiffer’s remarks come amid a broader debate over the role of wealth taxes in addressing income inequality and funding public services. While supporters see the tax as a fair way to redistribute wealth, opponents fear it could undermine California’s reputation as a business-friendly environment.
What Happens Next?
California voters will decide on Proposition 40 on November 3. If the measure passes, the state will need to implement a system to assess and collect the tax, while monitoring its impact on business retention and economic growth. The outcome will likely influence future tax policy debates across the United States.
For now, the business community remains divided. Some leaders are already exploring relocation options, while others are waiting to see how the measure plays out in the ballot box.
Key facts
- Proposition 40 would levy a 5% net‑worth tax on billionaires.
- Entrepreneur Eric Schiffer warns of a mass exodus of business leaders.
- The LAO estimates up to $1 billion in lost income‑tax revenue.
- Supporters argue the tax funds public services; opponents fear economic harm.
- The measure’s outcome will influence future wealth‑tax debates nationwide.
Why it matters
The proposed billionaire wealth tax could reshape California’s economic landscape by potentially driving away key entrepreneurs, reducing job creation, and altering the state’s tax revenue base.
Frequently asked questions
What is Proposition 40?
Proposition 40 is a proposed California ballot measure that would impose a one‑time 5% net‑worth tax on residents with fortunes of at least one billion dollars, effective in 2026.
Who would be affected by the tax?
Only California residents with a net worth of one billion dollars or more as of January 1, 2026, would be subject to the tax, excluding real estate, pensions, and retirement accounts.
What are the potential economic impacts?
The tax could cause some billionaires to relocate, potentially reducing state income‑tax revenue by up to $1 billion per year and impacting job creation and investment.
Sources
- [1] nypost.com — originally reported as “‘I’m out’: California wealth tax sparks stark business warning from entrepreneurs”
