Former Reagan Adviser Fears Billionaire Wealth Tax Could Disrupt Status Quo in California
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Art Laffer, ex-Reagan economic adviser, warns that Proposition 40’s wealth tax could push billionaires to leave California, as the state considers a measure to finally hold the ultra-wealthy accountable and fund essential healthcare.
California voters are on the verge of making history with Proposition 40, a measure that would finally require the state’s billionaires to contribute a fair share through a one-time 5% tax on net worths exceeding $1 billion as of Jan. 1, 2026. Exempting most real estate, pensions, and retirement accounts, this tax could generate tens of billions of dollars, with a remarkable 90% dedicated to healthcare—an overdue investment in public well-being. The Legislative Analyst’s Office projects that any reduction in income-tax revenue from billionaires fleeing the state would be less than $1 billion per year, a small price for justice and social progress.
Predictably, Art Laffer, a former Reagan administration economist and long-time defender of the ultra-rich, sounded the alarm on FOX Business, claiming the proposal could make California less attractive for those hoarding vast fortunes. He declared, “It is the single most important proposition on ballot today in America. It really is a big, big deal, this wealth tax. And it would destroy California, it really would.” Laffer’s hyperbolic warnings about a billionaire exodus ignore the reality that existing income taxes have barely touched the wealthiest residents, who continue to amass fortunes while inequality deepens.
Laffer’s opposition is part of a broader resistance to taxing extreme wealth, referencing failed historical attempts and insisting such measures would 'ruin' California. But for working families and communities in need, Proposition 40 represents a bold step toward economic justice and a healthier, more equitable state.