Trump was spot on again and now other top business leaders see it.
California’s reputation as the nation’s innovation powerhouse may soon be tested as wealthy residents and business leaders warn of serious economic consequences tied to a proposed billionaire wealth tax.
Silicon Valley — long considered the engine of American technology and job creation — could face a significant departure of capital and talent if the plan becomes law, according to billionaire investor Bill Ackman.
Ackman has cautioned that a one-time 5% tax on individuals worth more than $1 billion would push founders, entrepreneurs, and investors to leave the state.
“California would suffer enormously,” Ackman said, warning that high-value innovators would have little incentive to remain.
The proposed 2026 Billionaire Tax Act would apply to roughly 200 residents and is projected by supporters to raise as much as $100 billion over five years. Backers argue the funds would be used to support healthcare, education, and nutrition programs impacted by reduced federal spending.
Labor unions supporting the measure say the tax would be minimal for those affected and claim it is a targeted solution to budget shortfalls. However, critics argue the plan risks damaging California’s broader economy.
Even Governor Gavin Newsom is reportedly skeptical of the proposal, despite his history of supporting higher taxes on top earners.
Economic analysts warn that taxing wealth often means taxing businesses themselves. Chris Edwards, an economist with the Cato Institute, says most billionaire wealth is tied up in company ownership — not cash.
“These assets represent businesses that employ millions of Americans,” Edwards explained. “When those assets leave California, so do jobs, investment, and long-term growth.”
Edwards noted that companies founded by figures such as Steve Jobs, Jeff Bezos, and Elon Musk generated massive employment and innovation — benefits that extend far beyond the wealthy themselves.
Ackman agrees the current tax system allows some wealthy individuals to avoid income taxes by borrowing against stock holdings. However, he argues that reform should focus on taxing large stock-backed loans rather than imposing a direct wealth tax.
“When people borrow against stock, they’re accessing spending power without selling shares,” Ackman said. “That’s where reform should be considered.”
Edwards offered an alternative, suggesting that broader consumption-based taxes may provide more stable revenue without driving businesses out of the state.
California’s statewide sales tax currently stands at 7.25%, with some local rates reaching as high as 10.75%.
The billionaire tax proposal must still collect approximately 870,000 signatures by next spring to qualify for the statewide ballot.
As the debate continues, many Americans are revisiting a familiar warning raised by Donald Trump — that aggressive taxation and regulation could push investment, jobs, and economic growth out of high-tax states.
Whether California heeds that warning may determine its economic future for decades to come.