Former Reagan economic adviser Art Laffer discusses California’s billionaire wealth tax during an appearance on “Varney & Co.”
California voters are set to vote on a one-time billionaire wealth tax, a proposal that former Reagan economic adviser Art Laffer warns could accelerate the exodus of the state’s wealthiest residents.
Laffer joined FOX Business’ Stuart Varney on “Varney & Co.” to discuss California’s Proposition 40 and the broader push for the wealth tax.
Signs supporting a proposed wealth tax on California billionaires are being posted as the measure sparks debate over its potential economic impact and the risk of wealthy residents leaving the state. (Caroline Brehman/Bloomberg/Getty Images)
Proposition 40 would impose a one-time tax equal to 5% of the net worth of individuals who resided in California as of January 1, 2026, and had more than $1 billion in covered assets. Real estate, pensions and retirement accounts would generally be excluded. Ninety percent of the revenue would be spent on health care, according to the state legislative analyst’s office.
Laffer argued that the measure could make California less attractive to people who build and hold large fortunes.
Vermont Sen. Bernie Sanders is pushing for a billionaire wealth tax in California. The “Mornings with FOX Business” panel says the tax is unworkable, citing the historic failures of wealth taxes in Europe.
“This is the most important proposition on the ballot today in America. It’s a really 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 and be faced with this type of tax. It would cause an exodus of billionaires, who haven’t left California because income taxes don’t affect billionaires very much. This tax would really affect them,” he continued.
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The Legislative Analyst’s Office estimates the tax could raise tens of billions of dollars over several years, but says responses, including the departure of some billionaires from California, could reduce state tax revenue by less than $1 billion a year.
“The Big Money Show” discusses California’s proposed tax on billionaires and the potential exodus of wealth. The panel also analyzes Seattle’s plan to raise its minimum wage to $22 by 2027.
Laffer also linked the debate to a push for wealth taxation, invoking the Democratic Socialists of America, while asserting that such policies have failed.
“We’re going back to Karl Marx on taxing the rich…Everyone has wanted to tax the rich throughout the ages. And it’s never worked. It really has never worked, and in this case, it’s not going to work either,” Laffer said.
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‘Varney & Co.’ Host Stuart Varney details the economic challenges facing California, including high gas prices, soaring electricity costs and high taxes that are driving out the state’s residents on his “My Take.”
Although Laffer said he doesn’t take the broader socialist movement seriously, he made a distinction with the California proposal.
“The California ballot proposal is serious, but it would only ruin California,” he said.
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