Concerns Over California’s Proposed Wealth Tax

Entrepreneur Eric Schiffer has raised alarms about California’s proposed billionaire wealth tax, suggesting it might prompt some of the state’s most influential business leaders to leave. He predicts that a “giant sucking sound” will be heard if voters approve the initiative.

As the chairman of Patriarch and CEO of Reputation Management Consultants, Schiffer works with several billionaire clients, many of whom are unhappy with the proposed measure. “I think if this passes, a lot of entrepreneurs will just decide not to stay in California anymore,” he mentioned. “They’ve built their wealth already, and being taxed again doesn’t make sense.”

Schiffer elaborated that such prominent entrepreneurs have significantly contributed to the state’s revenue and job market, stating they might say, “No mas, I’m out. Goodbye,” due to feeling undervalued and attacked.

Proposition 40, which is set for the ballot on November 3, aims to impose a one-time 5% wealth tax on billionaires residing in California as of January 1, 2026. Although the tax payments could be stretched over five years, its implications could extend beyond just the wealthy.

Schiffer suggests that the potential fallout from this tax could also harm Californians without billion-dollar fortunes, ultimately affecting job opportunities in the state. “If these entrepreneurs leave, businesses, jobs, and tax revenue will follow,” he cautioned. “It’s naive to think this won’t hurt California’s economy.”

The proposal has garnered support from the California Democratic Party, though not without opposition from some leaders, including Governor Gavin Newsom. Newsom has voiced concerns about such a tax and hinted that if billionaires are targeted, it could set a precedent for taxing those with smaller fortunes.

The Legislative Analyst’s Office has acknowledged that some billionaires may consider leaving, which could diminish income tax revenue, though they project that the wealth tax could temporarily generate significant funds. Schiffer himself stated that if the tax expanded beyond billionaires, he would reconsider his residency in California.

Billionaire Mark Cuban has noted that many wealthy individuals have their wealth tied up in stocks rather than cash, complicating their ability to pay a wealth tax. Schiffer affirmed this sentiment, noting that the majority of a billionaire’s assets may not be liquid and could also affect decisions around their businesses.

Political figures supporting the tax, like Rep. Ro Khanna, argue that it would help support vital services for working-class Californians, but Schiffer contends that the bigger question remains about what message this tax sends to current and future entrepreneurs in the state.

“It’s shifting the contract for entrepreneurs,” he said. “It implies that California might not be the best place to build and grow a business anymore.” Schiffer concluded by emphasizing that losing the creative energies of top entrepreneurs would have long-term negative effects on the state’s economy.