California billionaire tax threatens capitalism and business job creation
NEWYou can now listen to Fox News articles!
California didn’t become the world’s fifth largest economy by accident. Silicon Valley wasn’t built by regulators. Hollywood did not become a global storytelling powerhouse because of government planning. California was built by entrepreneurs, risk-takers, and innovators who believed in capitalism and the simple American ideology that if you work hard, take risks, and build something valuable, you should be rewarded.
That’s why California’s newly proposed billionaire tax should alarm anyone who still believes capitalism works. This proposal isn’t just another tax increase. This is a radical departure from the system that has made Americans prosperous as a nation.
Under the plan, California would impose a one-time tax on residents with a net worth over $1 billion, targeting “wealth” rather than income. This includes unrealized gains, meaning stock ownership, private company equity, and illiquid assets that exist on paper. Wealth is not always about checking the accounts. Supporters call this fairness, but it’s a tax on success before that success is realized.
Here’s the part most politicians ignore. Billionaires aren’t necessarily sitting on piles of cash. Their wealth is largely tied to businesses, real estate holdings, and private companies. When the government demands a big check based on paper valuations, the only way to pay it is to sell assets.
EXTREME SPORTS STAR FIGHTS NEWSOM FOR BREAKING HIS CALIFORNIA DREAM: ‘WHAT HAPPENED?’
Elon Musk announced the launch of his third “America Party” via X on Saturday. (Francis Chung/Politico/Bloomberg via Getty Images)
This is where the real damage begins for the people who rely on these billionaires to provide them with jobs to become millionaires.
If you force someone to sell publicly traded shares, the markets can absorb it. But when you force a private company to sell its shares, you’re often forcing the founder to sell some or all of his business earlier than planned. This could mean selling to private equity, taking on leverage, cutting costs, or laying off workers to create liquidity.
In other words, a tax on the “rich” doesn’t just impact balance sheets. It is reflected in the pay slips.
WASHINGTON POST PROVIDED U-HAUL DATA ON MIGRATIONS TO ‘GROWTH SUPPORTING’ STATES IN CALIFORNIA, SAID ‘DECLINE IS A CHOICE’
Capitalism works because it fosters innovation and growth. It rewards people for starting companies, hiring workers, and reinvesting profits. When you start taxing wealth for mere existence rather than income, profits, or transactions, you turn this incentive structure upside down. The message becomes clear for entrepreneurs. If you build too much and become too successful, the government will punish you and probably dismantle what you built prematurely.
We’ve already seen how this movie ends for other Californians.
Take billionaire entrepreneur Elon Musk, who moved Tesla’s headquarters from California to Texas. Musk didn’t leave because he doesn’t like sunshine or beaches. He left as regulatory overreach, rising taxes and growing hostility to business innovation made it harder to start and scale companies. When the world’s most influential entrepreneur and job creator votes with his feet, policymakers need to listen.
CALIFORNIA HAS NO MONEY, BUT IT’S NOT TOO LATE FOR THE REST OF US
He wasn’t alone. Host Joe Rogan has moved his podcast empire out of Los Angeles, citing concerns about taxes, management and quality of life. Larry Ellison moved Oracle’s headquarters out of California. Look at Sergey Brin and Larry Page and their latest moves to cut ties with California. Even the liberal Hollywood elite quietly reside in Nevada, Texas or Florida while maintaining second homes in Malibu.
This is no coincidence. It is cause and effect.
If you force someone to sell publicly traded shares, the markets can absorb it. But when you force a private company to sell its shares, you’re often forcing the founder to sell some or all of his business earlier than planned.
Entrepreneurs don’t just create wealth for themselves. They create jobs, supply chains, tax revenue and philanthropy. When government policies force founders to sell companies prematurely just to pay a wealth tax, it is workers who pay the price long before billionaires do.
The danger doesn’t end at California’s borders. Other blue states are watching closely. If California can tax unrealized wealth, what’s to stop New York, Illinois, or Massachusetts from doing the same? There are billionaires today. Tomorrow the founders are worth $100 million. Next are family business owners who spent decades building companies only to be taxed at paper valuations for which they made no money.
CLICK FOR OTHER OPINIONS OF FOX NEWS
Supporters argue the tax would only affect a few hundred people. This misses the point. Policies are not judged by how many people they hit. They are evaluated based on the incentives they create.
Capitalism is based on the promise that if you take risks, build something meaningful, and create value for others, you will be rewarded with the pot of gold at the end of the rainbow.
CLICK TO DOWNLOAD FOX NEWS APPLICATION
California once understood this better than almost anywhere else in the world. This billionaire tax shows that the state has forgotten what makes it a true Golden State. Since COVID-19, you have witnessed a massive shift in both individuals and businesses that suggests the Golden State may not be so golden anymore.
The lesson is simple. Money is always after something. When success is seen as a liability, money goes away. And when capitalism weakens, everyone pays the price, not just billionaires.
CLICK HERE TO READ MORE FROM TED JENKIN
