California voters will decide Nov. 3 whether to impose a one-time 5% tax on the net worth of billionaires who lived in the state as of Jan. 1, 2026. Eric Schiffer, chairman of family office Patriarch and CEO of Reputation Management Consultants, says the measure will backfire by driving the state’s wealthiest residents out entirely.
Schiffer, who works with several billionaire clients including some in California, told FOX Business he expects a mass exodus if Proposition 40 passes.
“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?” he continued.
“You’re going to see some of the most brilliant, most successful men and women that have been the cornerstone of tax revenue and donational revenue and leading companies that are employing fleets of individuals and scores of individuals, they’re going to say, ‘No mas, I’m out. Goodbye,’ because they don’t feel respected or appreciated and they feel under attack,” Schiffer said.
What the tax would do
Under Proposition 40, the 5% net-worth tax would be due in 2027, with the option to spread payments over five years at extra cost. Real estate, pensions and retirement accounts would generally be excluded.
The California Democratic Party has endorsed the measure. Gov. Gavin Newsom has come out against it, as has Republican gubernatorial candidate Steve Hilton, who has warned it would further strain the state’s economy.
Ordinary workers could feel it too
Schiffer argues the fallout wouldn’t stop at the billionaire level.
“I think some of the consequences, if you’re a working individual in California, is there’s going to be less opportunity,” Schiffer said.
He said if entrepreneurs relocate, California stands to lose businesses, jobs, investment and tax revenue.
“If you think California, when you have all these billionaires bolt, isn’t gonna hurt and isn’t going to create problems and isn’t going to reduce tax revenue and reduce jobs, boy, you’re smoking some of the stuff that they’re selling in California in some of these stores,” he said.
Schiffer also warned the tax could be a foot in the door for taxing smaller fortunes down the road: “If they’re going after billionaires, then the next thing is they’re going after you if you’re worth hundreds of millions of dollars.”
Asked directly whether he’d leave California if the tax expanded to people worth a couple hundred million dollars, Schiffer said: “California, unfortunately, would be in my rearview mirror.”
What the state’s own analysts say
California’s nonpartisan Legislative Analyst’s Office acknowledges “some billionaires” may leave the state in response to the tax, taking their income tax contributions with them. The LAO estimates that and other behavioral responses could cut state income tax revenue by less than $1 billion a year, while the wealth tax itself would temporarily bring in tens of billions of dollars over several years.
Billionaire Mark Cuban has separately noted that many founders are “cash poor, stock rich,” with net worth tied up in company shares rather than available cash. Schiffer made the same point, noting many billionaires hold much of their wealth in stock, including in private companies.
The pitch from supporters
Rep. Ro Khanna, D-Calif., a proponent of the wealth tax, has argued it would help preserve health care for working-class Californians and has called opponents in the “Sacramento establishment” and lobbying community “blatantly out of touch.”
Schiffer says the real issue is the message the tax sends to anyone trying to build a company or wealth in the state.
“You’re changing the contract that America has sent to entrepreneurs,” he said. “And you’re saying, this isn’t a good place to do business.”
“What we don’t want to ever do is to lose the immense power and immense creative engines that the greatest entrepreneurs in the world continue to generate on behalf of the United States of America,” Schiffer added.
