A 23-year-old entrepreneur, who has made a fortune, decided against moving to San Francisco due to the proposed wealth tax in California.
Emil Barr expressed concerns that the state’s political environment could deter young business founders and limit job opportunities for residents.
Originally hailing from Russia, Barr moved to the U.S. when he was three. He founded Flashpass, a company based in Columbus, Ohio, designed to assist laid-off workers in acquiring new skills and finding jobs more efficiently.
He had signed a lease in San Francisco, intending to move there first before potentially relocating his business at a later time.
However, after learning about Proposition 40, which seeks to impose a wealth tax on the state’s wealthiest residents in the upcoming November ballot, Barr reassessed. He worries it could eventually extend to millionaires like himself.
“I just didn’t feel welcomed as an entrepreneur,” Barr shared. He added that being in his line of work, he’s particularly sensitive to the political climate. He questioned why he would choose to relocate to a state that seems to villainize successful entrepreneurs.
Proposition 40 proposes a one-time 5% tax on billionaires living in California starting January 1, 2026. Unlike income taxes, it would assess their overall wealth, with the majority of funds directed toward state healthcare.
Barr is not alone in his criticism. Governor Gavin Newsom has also spoken out against the measure, and Google cofounder Sergey Brin has financially supported efforts to defeat it.
On the other hand, supporters like Debru Carthan, vice president of a union backing the initiative, argue that fears of wealthy Californians fleeing the state are exaggerated. They claim the tax is crucial to counteract an estimated $100 billion in federal healthcare funding California could lose in the next five years.
Barr finds the potential retroactive nature of the tax particularly troubling, believing it could require wealthy individuals to pay taxes on assets held prior to the measure’s approval.
While he’s currently not affected, he’s concerned it might establish a trend of taxing entrepreneurs who have smaller fortunes.
“Right now it’s about billionaires,” he said, expressing apprehension that future initiatives could target those with $10 million or more in assets.
For Barr, his decision wasn’t solely about avoiding higher taxes. He recognized that doing business in California comes with a high price tag, which he was willing to shoulder at first.
What changed his mind was the perception of a growing hostility from the state towards successful entrepreneurs.
“Why would I move to a state where the government is basically, first of all, villainizing entrepreneurs?” he reiterated.
His choice may have implications beyond just his own company. Barr launched Flashpass roughly two years ago after selling his first venture, a marketing firm called Step Up Social, which he established while in college.
Initially, California appeared to be the perfect location for expansion, primarily because of its concentration of AI firms and research facilities.
He thought the state would be one of the first to encounter significant job displacement from advancements in AI technology, thus creating opportunities for his company to assist affected workers.
“We saw a very logical reason to be near the newest AI developments and also closest to the people that are losing their jobs first due to AI,” Barr explained.
He contended that without establishing a presence in California, residents might miss out on the services his company offers and struggle to find jobs quickly.
“I don’t think California is going to have the same level of access to our platform,” he indicated, saying that residents “aren’t going to be able to find new work as quickly just by virtue of our business not being there.”
However, the effects remain uncertain, given that Barr had not fully committed to relocating the company or determined how many potential California workers Flashpass could assist.
His original intention was to personally move to San Francisco before making a decision about the company.
“I had a personal lease in place and I was planning to move,” he shared.
Yet, he concluded that moving the company’s headquarters there was no longer a viable option without him residing in California.
Barr acknowledged that the state would lose relatively little in tax revenue from his decision alone, but he feels the broader issue lies in the possibility of other young entrepreneurs following suit.
He knows others in the business community who have decided privately to leave California or avoid moving there, but many hesitate to speak out due to Silicon Valley’s standing as a hub of innovation.
“There’s this idea that if you’re not in Silicon Valley, you can’t build an innovative company,” Barr said.
He believes that entrepreneurs who disagree with the state’s policies ought to express their dissent via their business choices rather than maintain investments in a state whose leaders seem to target them.
For now, Barr’s company stays in Columbus, where it began after securing its first contract with Ohio’s government.
He has not entirely eliminated the possibility of relocating the business elsewhere, but California is definitely off the table.
“I’m not even 100% sure we’ll keep the business in Ohio,” he remarked. “But I definitely know it’s not going to be California just based off of the political and business rhetoric that’s coming out of that state right now.”
