California wealth tax plan risks talent exodus after 650-CEO survey

A proposed California wealth tax would make the state's business climate untenable, critics argue, after a 2026 survey of more than 650 CEOs ranked California last in the nation for doing business.

"Capital — including intellectual capital — will go where it is wanted, and it will stay where it is well treated," Scott Kaufmann of Kansas City, Kan., wrote in a letter published in the Journal's Sept. 9 print edition, quoting the late banker Walter Wriston.

The letter responds to Rep. Ro Khanna's Sept. 3 op-ed advocating a "Pro-Business Wealth Tax Proposition" for California. Chief Executive magazine's 2026 survey of more than 650 CEOs, presidents and business owners ranked Texas, Florida and Tennessee as the top three states to do business — each with no state income tax. The highest-tax states brought up the rear, with California ranked worst in the nation.

The exchange highlights a structural tension between California's fiscal trajectory and the preferences of the business community. California already imposes the nation's highest top marginal income tax rate at 13.3 percent, according to the state Franchise Tax Board, and a wealth tax would add another layer of taxation on top of that burden. The survey data suggests that business leaders view this tax environment as a competitive liability that outweighs the state's advantages in technology, talent and market access.

The stakes extend well beyond California's borders. As capital and talent migrate to lower-tax jurisdictions, the state risks eroding the tax base that funds its public services and infrastructure. Texas, Florida and Tennessee have each positioned themselves as no-income-tax alternatives, and the survey results indicate that business leaders are taking notice. Miami real estate brokers have reported an influx of wealthy Californians seeking homes, a trend that reflects the broader movement of high-net-worth individuals out of the state.

The debate comes at a critical juncture for California's fiscal outlook. The state has faced persistent budget shortfalls in recent years, and policymakers are exploring new revenue sources to close the gap. But the CEO survey data suggests that tax increases could be counterproductive, driving out the high-income taxpayers who contribute disproportionately to state revenues. A wealth tax, in particular, targets the very individuals and businesses that have the greatest mobility and the most options for relocation.

Khanna's proposal, if it advances through the state legislature, would face significant legal and practical hurdles. Wealth taxes have been debated at the federal level but not enacted, and implementing one at the state level would raise complex questions about asset valuation, enforcement across state lines, and constitutional constraints on taxing non-residents. The proposal also faces political headwinds in a state where voters have shown mixed sentiment toward new taxes.

For California's business community, the survey results reinforce a growing concern: the state's tax environment is already a competitive disadvantage, and adding a wealth tax would deepen the problem. As Wriston's observation suggests, capital flows to where it is treated well — and the 2026 survey data indicates that California is not currently that destination. The question now is whether state policymakers will heed the signal before more of the state's economic engine migrates elsewhere.

This article is for informational purposes only and does not constitute investment advice.