A proposed California billionaire wealth tax sparks business exit fears as entrepreneur Eric Schiffer warns of lost jobs, investment and tax revenue.
A proposed billionaire wealth tax in California is fueling concerns among entrepreneurs and business leaders, with one prominent executive warning that the measure could drive wealthy founders out of the state and threaten jobs, investment and tax revenue.
Eric Schiffer, chairman of family office Patriarch and CEO of Reputation Management Consultants, told Fox Business that the proposed tax could prompt an exodus of entrepreneurs who have helped shape California’s economy.
Schiffer, who said he works with several billionaires, including California residents, argued that the measure could change how wealthy business owners view the state as a place to build and maintain their companies.
His warning comes as California prepares for a November ballot fight over Proposition 40, a proposed one-time levy targeting billionaires.
Entrepreneur Warns California Could Lose Business Leaders
Schiffer predicted that the proposed wealth tax could push successful entrepreneurs to relocate, potentially weakening California’s business environment.
He argued that business founders who have spent years building companies may reconsider staying in the state if the government imposes an additional tax on their accumulated wealth.
According to Schiffer, the potential departures could have consequences beyond the individuals directly affected, including fewer jobs, reduced investment and lower tax contributions.
He also expressed concern that the policy could discourage future entrepreneurs from establishing businesses in California.
Schiffer’s comments reflect the concerns of opponents of the proposal. However, the extent of any potential business exodus remains uncertain.
What California’s Proposed Billionaire Tax Would Do
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, with an option to spread payments over five years at an additional cost. Real estate, pensions and retirement accounts generally would be excluded.
Supporters have argued that the measure could generate substantial revenue for healthcare and other public services as California faces funding pressures.
The California Democratic Party has endorsed the proposal, while Gov. Gavin Newsom has voiced opposition.
The initiative has become a major point of contention among policymakers, business leaders and wealthy residents, particularly over its potential impact on investment and economic activity.
California Could Face Revenue Risks, Analysts Say
Schiffer warned that if wealthy entrepreneurs leave California, the state could lose businesses and employment opportunities, along with some of the tax revenue generated by high-income residents.
California’s nonpartisan Legislative Analyst’s Office has acknowledged that some billionaires may relocate in response to the proposed tax.
The office estimates that behavioral changes, including departures by some wealthy residents, could reduce state income tax revenue by less than $1 billion annually.
At the same time, the proposed wealth tax could temporarily generate tens of billions of dollars over several years.
The competing estimates highlight the uncertainty surrounding the measure’s long-term fiscal effects.
Critics Raise Concerns About Wealth Tied to Company Shares
Another concern raised by opponents is that many billionaires hold much of their wealth in company stock rather than readily available cash.
Mark Cuban has previously highlighted the distinction, arguing that some founders may be wealthy on paper but lack sufficient liquid assets to pay a substantial wealth tax without selling shares.
Schiffer echoed those concerns, noting that some entrepreneurs hold significant stakes in privately owned companies.
Critics argue that selling shares to cover tax liabilities could affect business ownership and investment decisions.
Supporters, including Democratic Rep. Ro Khanna, have defended the proposal as a way to preserve healthcare funding for working-class Californians.
Wealth Tax Debate Puts California’s Business Climate Under Spotlight
The dispute over Proposition 40 reflects a broader debate about taxation, wealth inequality and California’s ability to retain entrepreneurs and investment.
Schiffer warned that expanding wealth taxes beyond billionaires could prompt him to consider leaving California himself.
Whether the proposal results in a significant departure of wealthy residents remains an open question. Its potential effects on state revenue, business formation and employment are likely to remain central to the debate as voters consider the measure.
For California, the outcome could have implications for both public funding and its long-standing position as a major center for entrepreneurship and innovation.
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