Schiffer Warns California Billionaire Tax Could Drive Entrepreneurs Out

California entrepreneur Eric Schiffer warned that a proposed tax on billionaires could push business leaders out of the state if voters approve it. “They’re just not going to want to stay,” he told Fox Business, saying some of his billionaire clients oppose the plan.

The measure, Proposition 40, is on California’s November 3 ballot. It would impose a one-time tax of up to 5% on the wealth of billionaires who were California residents on January 1, 2026. Payment would be due in 2027, with an option to spread it over five years at added cost.

Schiffer argued that founders with much of their wealth tied up in company shares could face a tax bill without having cash readily available. He also warned that businesses leaving could take jobs, investment and income-tax payments with them.

That risk is part of a wider debate over the state’s tax base. California’s nonpartisan Legislative Analyst’s Office estimates that responses to the tax, including some billionaires leaving, could reduce annual income-tax revenue by less than $1 billion. It also expects the measure to raise tens of billions of dollars over several years.

The proposal’s backers say the money would help cover health care funding needs, with 90% of revenue directed to health programs and the rest to education and food assistance. The initiative’s stated purpose is to address needs worsened by funding reductions and fiscal uncertainty.

Polling shows voters remain divided. A Berkeley-POLITICO survey released September 21 found 45% of registered voters supported Proposition 40, 43% opposed it and 12% were undecided. Support had been 50% in February.

A move out of California after January 1 would not, by itself, remove someone from the measure’s stated tax base. Bloomberg Law reported that residency claims may face state audits examining personal and business ties, time spent in California and living arrangements elsewhere.

Economists disagree on how large any exodus would be. At a Stanford debate, UC Berkeley economist Emmanuel Saez questioned whether many billionaires would leave, while Stanford economist Joshua Rauh warned that departing entrepreneurs could take jobs and economic activity with them.