California keeps finding new ways to punish the people who built it.
A state ballot measure is now targeting billionaires directly, and one entrepreneur with boots on the ground says the blowback will be enormous.
And what Eric Schiffer told FOX Business about Proposition 40 should terrify every working Californian who depends on a job.
What Proposition 40 Actually Does
California voters face a choice on the November 3 ballot that goes well beyond taxing a few hundred tech moguls.
Proposition 40 would impose a one-time tax equal to 5% of net worth on billionaires who were California residents on January 1, 2026. The tax would be due in 2027, although payments could be spread over five years at an additional cost. Real estate, pensions, and retirement accounts would generally be excluded.
The measure would generate an estimated $100 billion by levying the one-time 5% tax on the state’s more than 200 billionaires. The bulk of those proceeds would go toward backfilling federal cuts to the state’s expansive low-income health program, Medi-Cal.
The California Democratic Party endorsed the measure, while some notable leaders, including Gov. Gavin Newsom, expressed opposition. And California Republican gubernatorial candidate Steve Hilton also warned that the billionaire tax would further strain the state’s economy.
That unusual split tells you something. Even Newsom, who spent years lecturing the country about taxing the rich, won’t touch this one at the state level. He understands the exit door is real.
California’s economy collapsing because businesses flee the state’s tax scheme won’t look good for Newsom’s 2028 Presidential campaign.
Schiffer’s Warning From Inside the Room
Eric Schiffer, chairman of family office Patriarch and CEO of Reputation Management Consultants, told FOX Business that he works with several billionaire clients, including some in California, and said many are unhappy about the proposal.
He didn’t sugarcoat it.
“I think the impact of this passing in California is a giant sucking sound of all of these entrepreneurs being sucked out of California because they’re just not going to want to stay,” Schiffer said. “Why would anyone stay if they have spent their life building wealth that they were already taxed on?”
That last question doesn’t get asked enough. These people paid income taxes when they earned the money. They paid capital gains taxes when they sold assets. Now Sacramento wants another bite — on the accumulated pile — just for still living there.
Schiffer argued that the tax could also affect Californians without billion-dollar fortunes, saying the consequences could reach their workplaces and economic opportunities. “I think some of the consequences, if you’re a working individual in California, is there’s going to be less opportunity,” Schiffer said.
Less opportunity. That’s a polite way of saying fewer jobs, smaller paychecks, and businesses that take their hiring elsewhere.
“Goodbye,” Schiffer said, describing the mindset of entrepreneurs who “don’t feel respected or appreciated, and they feel under attack.”
And when Schiffer was asked whether he personally would leave California if the wealth tax eventually reached down to people with hundreds of millions in net worth rather than billions, he did not hesitate. “California, unfortunately, would be in my rearview mirror,” he said.
That’s not a threat. That’s a plan.
“You’re changing the contract that America has sent to entrepreneurs,” he said.
He’s right. The implicit deal has always been: build something, take the risk, pay your taxes, and keep what’s left. Proposition 40 tears up that understanding and replaces it with a demand for a second payment on wealth that already got taxed on the way in.
The Exits Are Already Starting
This isn’t theoretical. The departure has already begun.
Billionaire and Uber co-founder Travis Kalanick officially joined the exodus from California, revealing he moved to Austin, Texas, just weeks before the proposed wealth tax could have targeted his estimated $3.6 billion fortune.
Kalanick said, “Just to be clear, on December 18, I moved to Texas. I don’t know what’s so specific about December 18, but let’s just say it’s prior to January,” in an interview with TPBN.
Building a Better California, an organization co-founded by Google co-founder Sergey Brin and former Google CEO Eric Schmidt, opposes the billionaire tax and sought to introduce three counter-questions to the November 2026 ballot. The opposition group amassed $110 million as of late June and reserved $87 million in advertising ahead of November. Google co-founder Sergey Brin committed $102 million to fighting the measure, while entrepreneur Mark Cuban warned publicly against it.
Brin didn’t just write a check. Along with others, he moved his assets out of the state entirely. These are not people who bluff.
“If they go after the billionaires, the next thing they will go after you if you have a fortune of hundreds of millions of dollars,” Schiffer said.
That’s the creep. It always works that way. The confiscatory logic that starts at the very top of the wealth ladder rarely stays there. European countries learned this the hard way. Dan Newman, who runs the Stop the Squeeze PAC opposing Proposition 40, pointed to countries that tried and abandoned wealth taxes: “We’ve seen some examples of it. Sweden and Denmark and Finland and France have all tried and then abandoned this.”
Those governments didn’t repeal those taxes out of compassion. They repealed them because the wealthy left and the revenue collapsed.
What Sacramento Gets Wrong Every Single Time
Sacramento operates on a fantasy. The fantasy goes like this: the wealthy are stuck, they’ll absorb whatever tax gets levied on them, and the revenue will flow forever.
But wealthy entrepreneurs are precisely the people with the resources, the accountants, and the options to vote with their feet. They built mobile companies. They have offshore holdings. They know how to structure their lives across state lines. And unlike a working family with kids in school and a mortgage on a house, a billionaire can physically relocate in a matter of weeks.
California’s nonpartisan Legislative Analyst’s Office acknowledged that “some billionaires” may decide to leave the state in response to the tax, taking their income tax revenue with them. The LAO estimates those and other behavioral responses could reduce state income tax revenue by less than $1 billion per year. At the same time, it estimates the wealth tax would temporarily generate tens of billions of dollars over several years.
That LAO estimate — a reduction of less than $1 billion annually — deserves scrutiny. It assumes the behavioral response will be modest. It assumes billionaires mostly stay. And it assumes no one in the $500 million to $999 million range changes their behavior out of fear that next year’s ballot measure expands the threshold downward.
All three of those assumptions look shaky right now.
Governments do not create wealth. They redistribute it. Every dollar seized through Proposition 40 is a dollar that won’t fund a startup, hire an engineer, back a small business loan, or build something that creates jobs a decade from now. The tax’s supporters frame it as extracting surplus from people who have “enough.” But capital doesn’t sit still. It either gets deployed into productive investment or it disappears across a state border.
Schiffer’s clients aren’t sitting around waiting to see what voters decide. Some of them are already making calls to relocation attorneys. The exits don’t wait for Election Day.
California has already watched a steady stream of companies and individuals head to Texas, Florida, Nevada, and Tennessee over the past decade. That trend accelerated during the COVID lockdown years, when Sacramento’s heavyhanded approach to shutting down the private economy convinced business owners that the state didn’t particularly value them. Proposition 40 sends the same message in a different font.
And when those entrepreneurs go, they take everything with them. Not just their own tax bills. The payroll taxes from the companies they fund. The property taxes from the campuses they build. The philanthropy that funds hospitals, universities, and museums. The ripple effects run much deeper than any LAO model captures.
Schiffer put it plainly: “I think some of the consequences, if you’re a working individual in California, is there’s going to be less opportunity.”
That’s the part Proposition 40’s backers refuse to reckon with. They want voters to see this as a question about billionaires. But the working Californian who loses a job because her employer relocated to Austin, or the young engineer who gets passed over for a role at a startup that moved to Miami, pays a very real price for a tax she never owed.
California isn’t running short on taxes. It’s running short on the conditions that attract and retain the people who generate the tax base. Proposition 40 makes those conditions worse, not better. And some of the state’s most economically consequential residents are already writing their forwarding addresses.
Source: Fox Business, “California entrepreneur warns billionaire wealth tax could trigger ‘giant sucking sound’ of business exits”
