Former Reagan Advisor Art Laffer Warns California Billionaire Tax Could Devastate State

Former Reagan economic adviser Art Laffer examined California’s proposed billionaire wealth tax during his appearance on ‘Varney & Co.’

California voters will soon vote on a one‑time wealth tax targeting billionaires, a measure Laffer warns could hasten the departure of the state’s richest residents.

Laffer appeared alongside FOX Business host Stuart Varney on ‘Varney & Co.’ to discuss Proposition 40 and the growing national conversation about wealth taxation.

Supporters display signs for the proposed California billionaire wealth tax as the initiative sparks debate over its economic consequences and the possibility of affluent residents departing the state. (Caroline Brehman/Bloomberg / Getty Images)

Proposition 40 would levy a one‑time tax of 5 % on net worth for individuals who were California residents on January 1, 2026 and hold more than $1 billion in covered assets, while generally exempting real estate, pensions and retirement accounts. The state’s Legislative Analyst’s Office estimates that 90 % of the proceeds would fund healthcare.

Laffer contended that the tax would diminish California’s appeal to entrepreneurs and investors aiming to build and retain substantial fortunes.

Senator Bernie Sanders of Vermont backs the California billionaire wealth tax, whereas a panel on ‘Mornings with FOX Business’ labeled the proposal impractical, pointing to the historical shortcomings of wealth taxes in Europe.

“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 said.

“No one would want to go there to build their wealth only to be faced with this type of tax. It would cause an exodus of billionaires, which have not left California because the income taxes do not affect the billionaires much at all. This tax would really affect them,” he continued.

CALIFORNIA BUSINESS CLIMATE GETS WARNING FROM REAL ESTATE MOGUL: ‘ENOUGH IS ENOUGH’

The Legislative Analyst’s Office projects that the tax could raise tens of billions of dollars over several years, yet notes that any behavioral responses—including potential billionaire departures—might trim state income‑tax revenues by under $1 billion each year.

‘The Big Money Show’ examined California’s proposed billionaire tax and the risk of a wealth exodus, while also reviewing Seattle’s plan to increase its minimum wage to $22 by 2027.

Laffer linked the discussion to a broader push for wealth taxation, citing the Democratic Socialists of America, and argued that such policies have consistently failed.

“We go back to Karl Marx on taxing the rich… Everyone has wanted to tax the rich through ages. And it’s never worked. It’s really never worked, and in this case it won’t work either,” Laffer said.

TOP REAL ESTATE MOGUL ISSUES STARK WARNING AS CALIFORNIA BUYERS SAY ‘ENOUGH IS ENOUGH’ ON TAXES

During his ‘My Take’ segment on ‘Varney & Co.’, host Stuart Varney outlined California’s economic challenges, citing high gasoline prices, rising electricity costs, and steep taxes that are prompting residents to leave the state.

Although Laffer dismissed the wider socialist movement as insignificant, he distinguished the California ballot measure from that broader ideology.

“The ballot proposition in California is a serious one, but it would just ruin California,” he said.

Source link