Eric Schiffer, a California entrepreneur, has raised concerns that a proposed billionaire wealth tax could lead to an exodus of the state’s top business leaders. He predicts a significant departure of entrepreneurs if voters endorse the measure.
As the chairman of Patriarch and CEO of Reputation Management Consultants, Schiffer represents various billionaire clients, including those based in California, many of whom are frustrated by the tax proposal.
“I think the impact of this passing in California is, well, you’re going to hear a giant sucking sound of entrepreneurs leaving,” Schiffer remarked. “Who would want to stick around after spending their lives building wealth, only to be taxed again?”
His sentiment is echoed by concerns that some of California’s most talented individuals, who contribute greatly to tax revenue and local job markets, might decide to leave the state, feeling undervalued and targeted.
Proposition 40, which will appear on California’s ballot on November 3rd, suggests a one-time tax of 5% of net worth for billionaires residing in the state as of January 1, 2026.
This tax would be payable in 2027, but individuals could opt to spread the payments over five years, potentially increasing their cost. Notably, real estate, pensions, and retirement accounts would likely be exempt from the tax.
The California Democratic Party supports the initiative, although prominent figures like Governor Gavin Newsom have spoken against it. Additionally, Republican gubernatorial candidate Steve Hilton has warned that such a tax could further weaken California’s economy.
Schiffer believes that the tax could also indirectly affect Californians without billionaire status, leading to reduced job prospects and economic opportunities in the state.
“You might see fewer opportunities if entrepreneurs start moving away,” he suggested. “If they leave, California would be losing out on jobs, businesses, and tax revenues.”
He further cautioned that if the government targets billionaires, it may not be long before they set their sights on those with smaller fortunes, saying, “If they’re going after billionaires, they might soon go after those worth hundreds of millions.”
The nonpartisan Legislative Analyst’s Office in California has indicated that some billionaires may opt to leave the state in response to the new tax, taking significant income tax revenues with them. However, they project that behavioral responses could reduce income tax revenue by less than $1 billion annually, while the wealth tax might generate tens of billions over several years.
When asked if he would leave California if the tax extended to individuals with smaller fortunes, Schiffer replied, “If it came to that, I’d unfortunately have to consider moving on from California.”
Mark Cuban has also pointed out that many billionaires are “cash poor, stock rich,” meaning a significant portion of their wealth is tied up in company shares rather than liquid cash available for taxes.
Schiffer echoed this concern, noting that many billionaires are heavily invested in stocks, often including private company shares.
Representative Ro Khanna, a supporter of the wealth tax, contends that the revenue could help maintain health care services for working-class Californians and criticized those opposed as being out of touch with reality.
Ultimately, Schiffer emphasized that the proposal raises underlying questions about California’s treatment of entrepreneurs, suggesting that it sends a negative message about the business climate in the state. “It alters the contract America presents to entrepreneurs, implying this isn’t a good place for business,” he said.
Given the immense contributions of innovative entrepreneurs to the economy, Schiffer believes it’s critical to retain their talents and efforts for the benefit of California and the nation.
