Californian Suicide
The Golden State's Great Golden Fleece...
“The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”
– Henry Hazlitt, Economics in One Lesson (1946)
Joel Bowman with today’s Note From the End of the World: Tokyo, Japan…
No time for pontificating preambles today, dear reader… your editor is busy time traveling.
That is, having departed from Tokyo’s Narita airport late Friday afternoon, then traveling east for nine hours, we expect to land in Los Angeles Airport that same Friday morning… roughly eight hours “before” we took off.
Fun with international date lines!
But fear not… we have no intention of leaving you in the lurch. In fact, while we’re California Dreamin’ at 35,000 feet over the Pacific, we’ve lined up an excellent column by California expatriate MN Gordon, concerning what he calls The Golden State’s “Golden Fleece.” (Classics lovers will doubly appreciate the pun…)
According to Gordon, California may be “last” in the (contiguous) United States when it comes to time zones… but if Governor Gavin Newsom realizes his presidential aspirations, it will be first in leading the nation… to political and economic suicide. Gordon details Newsom’s latest “eat the rich” policy, and what it would mean if writ large for America, below…
By the way, if you’d like to see more of Mr. Gordon’s fine work, do be sure to check out his Economic Prism website, right here. We have no financial arrangement with our long time contributor and do not benefit from featuring his writing... other than that we simply enjoy what he has to say and hope you do, too.
Cheers,
Joel
California and The Art of Economic Suicide
by MN Gordon, Founder of Economic Prism
Have you heard of California’s latest act of economic suicide? Once again, the Golden State’s come up with new and ridiculous ways to turn gold into lead.
If you haven’t been watching the headlines, the 2026 California Billionaire Tax Act (Initiative No. 25-0024) is officially making its way onto the stage. Sponsored by the SEIU-United Healthcare Workers West, this ballot measure wants to slap a one-time 5 percent excise tax on the net worth of every individual in the state worth over $1 billion.
The measure’s sales pitch even has a nice, philanthropic ring to it: “Eat the rich to save the sick.”
In reality, it’s a classic case of what happens when a state treats its most productive citizens like an ATM with an infinite balance. It’s also another fine example of why California’s circling the toilet bowl.
The proponents of the Act claim the state is staring down a fiscal abyss. Certainly, that’s true. Sacramento currently needs to fill a deficit that swings wildly between $3 billion and $20 billion depending on which way the wind blows.
Apparently, federal cuts to healthcare (Medi-Cal) and food assistance are leaving a multi-billion-dollar gap. Thus, per the hacks in state government, an emergency tax on billionaires is needed to save California’s healthcare system from collapse. By taxing the roughly 200 billionaires living in California, the money grubbers estimate a one-time windfall of $100 billion.
On paper, it sounds like a nifty solution. Supposedly, ninety percent of the money will go to healthcare. Yet when it comes to Sacramento, no amount of money is ever enough for the blood suckers in the legislature.
We’ve seen this script before. Temporary taxes become permanent fixtures. One-time levies become emergency annual dues. In California, a budget crisis isn’t a fluke. It’s a feature of a system that spends money faster than a Silicon Valley founder at a Burning Man auction.
Mass Exodus
If Sacramento thinks billionaires are just going to sit around and wait for the Asset Seizure Team to show up and confiscate their wealth, they haven’t been paying attention to the moving truck traffic heading east on I-10 and I-80.
California is already losing people. In fact, for six consecutive years the state has recorded a net loss in residents – roughly 216,000 in 2025 alone. We were born in California. We lived and worked there for over four decades. We got the hell out in 2022.
At this point, it’s not just retirees moving to Arizona for the dry heat and affordable housing. It’s the high earners. Recent data shows that while lower-income residents leave due to housing costs, the wealthy exodus is accelerating due to the tax climate. Since 2019, more than 200 major businesses have relocated out of the state, including Oracle, Hewlett Packard Enterprise, Charles Schwab, Chevron, In-N-Out Burgers, and many more.
Industry insiders are already reporting that 80 to 90 percent of the individuals targeted by this tax have either already established residency elsewhere or are in the process of doing so before the tax obligation date. Nonetheless, it may already be too late, as exit tax proposals are being considered to rob wealthy residents when they bail out for the last time.
We are witnessing a high-stakes game of geographic musical chairs where the music has already stopped. These wealthy billionaires aren’t just moving their families. They are re-domiciling their entire financial legacies to jurisdictions that don’t view them as milk cows.
When the state treats its most successful citizens like a captive resource, those citizens simply remove the captive part of the equation. By the time the tax collectors arrive with their clipboards, they’ll find nothing but empty mansions and “For Sale” signs as the tax base evaporates into the Nevada desert.
When you tell someone you’re going to take 5 percent of everything they’ve ever built – not their income, but their existence – they don’t just gladly pay up. They leave. And when they leave, they take their future investments, their charitable foundations, and their capital gains taxes with them.
The Seen and the Unseen
This brings us to the core of the problem, famously articulated by economist Henry Hazlitt in Economics in One Lesson. Hazlitt warned of the “seen and the unseen.”
In this case, the “seen” is the $100 billion the state hopes to confiscate. It’s the shiny new clinics, the press releases about funded programs, and the politicians cutting ribbons. This is what the public sees, and it’s why 60 percent of likely voters currently support the measure.
The “unseen” is the destruction of capital. To pay a 5 percent wealth tax, billionaires don’t just reach into a vault of gold coins. Their wealth is held in productive assets, including stocks, real estate developments, and venture capital funds.
When Sacramento forces a fire sale of these holdings, they aren’t just taxing a person. Rather, they are decapitalizing the very industries that keep California’s economy afloat.
This mandatory liquidation triggers a ripple effect of devalued stock prices and stalled innovations that never get off the drawing board. We don’t see the thousands of jobs that were never created or the breakthroughs in technology and medicine that simply vanished because the seed money was siphoned off to feed the bureaucratic machine.
To pay the state, the billionaires must sell these assets. Every dollar paid to Sacramento is a dollar not invested in a new startup, a new housing project, or a new piece of medical technology. Moreover, when a billionaire leaves, the state doesn’t just lose that 5 percent. It loses the 13.3 percent top marginal income tax rate and capital gains tax they pay every year.
By focusing on the “seen” (the immediate cash grab), Sacramento is blind to the “unseen”. That is the slow-motion collapse of the state’s capital system.
California and The Art of Economic Suicide
California already has the most progressive tax system in the industrialized world. The top 1 percent of earners pay nearly 50 percent of the state’s income tax.
By targeting billionaires with a wealth tax, the state is effectively sawing off the branch it’s sitting on. If the 200 billionaires leave – and many already are – the tax burden doesn’t disappear. It just shifts down.
When the blood suckers in Sacramento realize the $100 billion windfall didn’t fix the structural deficit, because they spent it all on new recurring programs, they will come for the near-billionaires, then the multi-millionaires, and eventually, the upper-middle class.
The 2026 Billionaire Tax Act is a desperate play by a state that is unwilling to operate with fiscal discipline. It treats wealth as a static pile of cash to be looted rather than a dynamic engine that drives the economy.
If this measure passes in November, Sacramento might get its $100 billion relief for a year or two. But the unseen cost – the lost jobs, the vanished startups, and the permanent departure of the state’s tax base – will haunt California indefinitely.
Ultimately, this is the tragedy of the California Dream souring into a cautionary tale. By the time the legislature realizes that wealth is mobile and capital flows to where it is treated best, the damage will be irreversible. You cannot build a stable society on the foundation of resentment and confiscation.
As the engines of innovation flee the state, California will be left with a bloated bureaucracy and a crumbling infrastructure that no amount of emergency levies can fix. The state isn’t just taxing the rich, it’s taxing its own future into oblivion.
Alas, Governor Gavin Newsom – a gaslighting failure – is the leading 2028 Democratic presidential candidate. Should voters fall for his slick hairdo, California’s wealth confiscation policies will ensnare the entire nation.
Kind regards,
MN Gordon
Founder of Economic Prism
Joel’s Note:
And thanks again to MN Gordon for his timely guest column. Gordon is the founder and author of the excellent Economic Prism newsletter. We’re happy to bring you his work from time to time, not because we have any financial arrangement with him (we don’t), but because it’s thought-provoking and we think you might enjoy it, too. Cheers ~ JB
More of him, less BB
Waiting for Vegas to handicap which states or major Blue city's economy will bring the Democrats midterm prospects down first. It will be either New York City's Mandavi or California Governor Newsom. Pass the popcorn and settle in...