Once a 'one-time' wealth tax is implemented to cover deficits, it removes pressure on politicians to manage finances responsibly. The tax becomes a recurring tool, and the definition of 'wealthy' inevitably expands as the original tax base leaves the jurisdiction.

The proposed California "entrepreneur's tax" is not a one-time levy on billionaires. It's viewed as the first step toward an annual tax on paper wealth, with thresholds planned to drop to $25M. This would impact founders with illiquid equity post-Series B, forcing a mass exodus before an IPO.

A controversial feature of the proposed California billionaire tax is its retroactive application. The tax would affect anyone who was a billionaire resident at the start of the year, even if the law passes months later. This legal mechanism is designed to stop wealthy individuals from moving their assets out of state before the vote occurs.

California is on the verge of a massive tax revenue surge from upcoming IPOs of companies like SpaceX and OpenAI. However, a proposed wealth tax on illiquid assets is causing tech leaders to relocate, potentially costing the state the very economic boom it needs to balance its budget.

A proposed wealth tax in California triggered a significant flight of capital and high-net-worth individuals, even without becoming law. The key factor was the failure of politicians to uniformly condemn the proposal, which was perceived as a threat to fundamental property rights, signaling a hostile business climate.

Contrary to common belief, Arthur Laffer asserts that historical data shows a clear pattern: every time the highest tax rates on top earners were raised, the government collected less tax revenue from them. The wealthy use legal means to avoid taxes, and economic activity declines, ultimately harming the broader economy.

A proposed California wealth tax is reportedly causing a pre-emptive capital flight. Crucially, the exodus includes individuals not directly targeted, who fear the law's scope could easily expand. This demonstrates how the mere threat of a policy can trigger significant economic consequences before it's even enacted.

The proposed wealth tax applies to illiquid assets. A founder of a highly-valued private AI startup could be deemed a 'billionaire' and face a massive tax bill on paper wealth, even if their company never exits or ultimately sells for a much lower price, creating a huge financial risk.

Billionaire wealth taxes are easily dodged by relocating. A more robust policy would tax capital gains based on the jurisdiction where the value was created, preventing billionaires from moving to a zero-tax state just before selling stock to avoid taxes.