California’s emergence as the world’s fifth-largest economy is no accident. Silicon Valley was not built by regulators. Hollywood didn’t become a global storytelling power because of government planning. California was founded by entrepreneurs, risk-takers, and innovators who believed in capitalism and the simple American ideology that if you work hard, take risks, and create something of value, you should be rewarded.

that’s why California’s new proposed billionaire tax This should come as a shock to anyone who still believes capitalism works. This proposal is not just another tax hike. This is a fundamental shift in the institutions that make the American nation prosperous.

Under the plan, California would impose a one-time tax on residents with a net worth of more than $1 billion, targeting “wealth” rather than income. This includes unrealized gains, namely stock ownership, private company equity and illiquid assets that exist on paper. Wealth doesn’t always live in a checking account. Supporters call it fair, but it’s a success tax before being successfully implemented.

This is the part that most politicians ignore. Billionaires are not necessarily sitting on piles of cash. Their wealth is overwhelmingly tied to businesses, real estate stocks and private companies. When governments demand huge checks based on paper valuations, the only way to pay is to sell assets.

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Elon Musk announced the launch of his third “American Party” via X on Saturday. (Frances Chung/Politico/Bloomberg via Getty Images)

The real damage begins for those who rely on these billionaires to provide them with jobs and thus become millionaires.

If you force someone to sell public stock, the market can absorb it. But when you force a sale private company stocksyou often force founders to sell part or all of the business earlier than planned. This could mean selling to private equity firms, leveraging, cutting costs or laying off employees to generate liquidity.

In other words, taxes on the “rich” don’t just affect balance sheets. It affects payroll.

The Washington Post cited California’s U-HAUL data and said “rejection is a choice”

Capitalism works because it stimulates innovation and growth. It rewards people for building companies, hiring workers, and reinvesting profits. When you start taxing only existing wealth rather than income, profits or transactions, you invert the incentive structure. For entrepreneurs, the message becomes clear. If you build too much and have too much success, the government will punish you and possibly tear down what you built prematurely.

We’ve seen how this movie ends for other Californians.

Take the Billionaire Entrepreneur as an Example Elon Muskhe moved Tesla’s headquarters from California to Texas. Musk didn’t leave because he didn’t like the sun or the beach. He left because overregulation, rising taxes and growing hostility to business innovation made it harder to create and scale companies. When the world’s most influential entrepreneurs and job creators vote with their feet, policymakers should listen.

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He is not alone. Host Joe Rogan moves his podcast Empire pulls out of Los Angeles, citing tax, governance and quality-of-life issues. Larry Ellison moves Oracle headquarters out of California. Just look at Sergey Brin and Larry Page and their recent move to cut ties with California. Even the liberal Hollywood elite quietly settle in Nevada, Texas or Florida while maintaining a second home in Malibu.

This is no coincidence. This is cause and effect.

If you force someone to sell public stock, the market can absorb it. But when you force the sale of private company stock, you often force the founders to sell part or all of the 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 to pay wealth taxes, workers pay the price long before the billionaires do.

The danger doesn’t stop at California’s border. other blue states We are paying close attention. If California can tax unrealized wealth, what’s stopping New York, Illinois, or Massachusetts from doing so? Today, it’s a billionaire. Tomorrow, its founder will be worth $100 million. Second, family business owners spend decades building their companies, only to be taxed on book valuations that have not yet been monetized.

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Supporters believe the tax would affect only a few hundred people. This misses the point. The quality of a policy is not judged by how many people are affected. They are judged on the inspiration they create.

Capitalism relies on the promise that if you take risks, create something meaningful, and create value for others, you can get a pot of gold at the end of the rainbow.

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California once understood this better than almost anywhere else in the world. This billionaire tax shows that the state is forgetting what makes it the true Golden State. Since COVID-19, you’ve seen massive shifts among individuals and businesses that suggest the Golden State may not be so golden anymore.

The lesson is simple. Money is always chasing something. When success is seen as a burden, money disappears. And when Capitalism is destroyedeveryone pays, not just billionaires.

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