Reagan Adviser Warns California’s Wealth Tax Threatens State’s Future and Drives Away Job Creators
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Art Laffer, former Reagan economic adviser, cautions that Proposition 40’s punitive billionaire wealth tax could force California’s most successful residents to flee, devastating the state’s economy and undermining prosperity.
California voters are facing a dangerous proposal in Proposition 40, which would slap a one-time 5% tax on the net worth of residents with more than $1 billion in assets as of Jan. 1, 2026. Excluding most real estate, pensions, and retirement accounts, this tax is projected by the Legislative Analyst’s Office to raise tens of billions of dollars, with 90% earmarked for healthcare spending. However, the supposed loss of income-tax revenue from departing billionaires is estimated at under $1 billion per year—a figure that grossly underestimates the long-term damage to California’s economy.
Art Laffer, a respected economist from the Reagan administration, warned on FOX Business that this radical proposal could make California a hostile environment for innovators and job creators. He stated, “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 emphasized that the tax would likely trigger a mass exodus of billionaires, pointing out that even California’s already high income taxes have failed to deter their success—until now.
Laffer connected this debate to the broader left-wing push to punish success through wealth taxes, referencing failed attempts in history and arguing such policies have never worked. He concluded that, despite its seriousness, this measure would 'ruin California,' leaving the state poorer and less competitive in the global economy.