Former Reagan adviser warns wealth tax could prompt billionaire exodus from California
Art Laffer, a former economic adviser to President Reagan, cautioned that Proposition 40’s one-time billionaire wealth tax may drive wealthy residents out of California and harm the state’s economy.
California voters will consider Proposition 40, a measure that would levy a one-time tax of 5% 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. The state’s Legislative Analyst’s Office estimates the tax could raise tens of billions of dollars, with 90% earmarked for health-care, while any loss of income-tax revenue from departing billionaires is projected to be under $1 billion per year.
Former Reagan administration economist Art Laffer told FOX Business that the proposal could make California less attractive to individuals building large fortunes. > "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," he said. He added that the tax would likely cause an exodus of billionaires, noting that existing income taxes have had little impact on them.
Laffer also linked the debate to broader efforts to tax wealth, referencing historical attempts and arguing they have not succeeded. He concluded that while the measure is serious, it would “ruin California.”