461 California’s New Life Savings Tax Hiding in the “Billionaire Tax” with Hoover Institution Top Gun Benjamin Jaros

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0:45Today, a topic that affects everybody in California, everybody in tech, and could very well affect everybody in the United States over time. You see, this November, 2026, the government of California is asking taxpayers, is asking voters to give them the right to tax your life savings, your stocks, your assets, things you own. That's right. and of course every asset we have our life savings is purchased with after-tax dollars and if you buy for example a stock and you make ten dollars a share on a hundred shares well you're going to have to pay tax on the gains of that that's not enough the government now wants to be able to tax you on the value of your assets that you hold whether or not you've realized a gained from them or not.

1:41You see, for the first time in American history, that's what they're trying to do. And they're marketing it as a one-time 5 % billionaire tax. Oh, and it's called Prop 40. But it's a very big Kardashian-sized butt. Even though they're marketing it as a one-time billionaire tax, it opens the door for something else. That's the right to tax everybody's assets, everybody's life savings in California. And so today, a powerful, authentic dialogue with Dr. Benjamin Robert Yarosh. You see, Dr. Ben is on the team at Stanford's legendary Hoover Institute, who's been studying this new tax proposal in California.

2:29And in my opinion, at least from the research that I've seen, Ben and his colleagues have done the most powerful research on this new proposed tax. Ben is a PhD economist and research fellow at the Hoover, and he specializes in public finance, financial economics, and economic history. And you've probably seen him in the Wall Street Journal, the New York Post, and Real Clear Politics. This conversation is one that matters to everybody in California that owns anything and potentially everyone else in the United States. It's fascinating, educating, and absolutely mind-blowing. So now, as Joey Ramone said, hey-ho, let's go.

3:26Well, Ben, it sure is fantastic to see you. How are you, brother? I'm good. Thank you, Chris. I've been looking forward to this very much. And off the top, let me say how much I appreciate the work of you and your colleagues at Hoover for the incredible amount of work that you've done on this over the last handful of months. Yeah, I appreciate that. It's been a long, been a long year. My background is in tax policy research. I did, my dissertation had different areas within tax policy for economics. And when I started working here, I, yeah, last November, December, I did not anticipate that we would do this many papers on wealth taxation.

4:06I had a paper I'd been working on with my advisor at one point in how it could impact the returns to capital in a jurisdiction. But it's been an exciting ride. I really like a wonderful team. And I appreciate anybody reading our works. Thanks for reading it. I read them all. All the ones that I saw, well, the ones that I saw, and then your PR folks sent some others that are more recent that I hadn't seen. Also, I have deep respect for Condoleezza Rice. I think she's an American treasure. Like most people, I'm a political independent, so I agree with some things on the left and some things on the right.

4:44Her and I don't agree on everything, but what I know for her, just watching her, is she's an extraordinary American. Yeah. Yeah. Condi's amazing. She gave a great speech today at the Pentagon of 9-11 remembrance. She was there. The president spoke as well. But it was retangible. She talked about the bunker and her time with Bush. Yeah, I don't know when or if. Maybe never September 11 will ever not have a meaning for a lot of America. Well, it's interesting. as a side note, I know that's not what we're talking about today, but I've done some research on this. And approximately a third of Americans were either not born or too young to remember 9-11.

5:32And I've been doing my own casual research and I'm asking young people what they know about 9-11. And the results that I get back in my informal surveys are shockingly familiar or shockingly the same. They know two planes hit the World Trade Center. They don't know about the other two planes. They know that it was terrorists. They don't know who the terrorists are. And they don't know how many people died. They know it was, quote, a lot. And the guesses I get is around a thousand. So they don't know it was about 3 ,000 people. And they don't know that it was - You don't want to quiz me, you can quiz me.

6:08I'm young. I have a feeling you know. Do you know who attacked us on 9-11, Ben? Osama bin Laden, another terrorist. He was the organizer, but a lot of different, I guess we'll call them Al-Qaeda terrorist cells who are from different areas. Ayaan Hirsi Ali just had an article about the, in Tablet, very good article about the German, someone who was from Cairo, a doctor, you know, he was from Cairo and he was one of the, one of the, so they came from a diverse background, but they were also united in their, in their hatred of our nation and our ideals. And I assume you know what ideology they subscribe to?

6:45Radical Islam would be the easiest, the easiest answer we can talk i mean we're not going to talk about i mean or we can talk about sam huntington and clash of civilizations right whether that was always going to happen whether the west was sleeping as it fought itself during the 20th century but you know our forefathers of old thomas jefferson recognized the bar back to the barbary pirates that there was a discontinuity and culture and there that was not permeable would be the right word but uh right yeah so it But yeah, and then I can give you my, I'm young. Yeah, how old were you on 9-11, if you don't mind me asking?

7:22I was four years old. Wow. It was one of my earliest memories, actually. I remember my parents coming home, my dad coming home from work, and my mom crying and turning on the TV and watching, just sitting there as a four-year-old watching the TV. And I remember it distinctly because my dad came home, I don't know, middle of the morning which was a very unique why is my dad here at 10 a.m why did why did my older siblings all come back from school what's going on and so i remember watching and um yeah yeah it's um so i'm probably at the i'm at the end of the i'm at the end of the memory pool yeah because i didn't and then i had i guess other other students in my class they had uh parents who went over and served.

8:13So I remember that too. Who enlisted afterwards. Yes. Yeah. Yeah. Or were enlisted and were sent. Right. Well, God bless every single one of them. Amen. Yeah. And did you get taught it in school? The thing that I'm finding is it's either not being taught in school or just sort of generally being touched on. And then there's not the specificity of it, who attacked us. they don't know who Todd Bremer is the guy who took down the the flight or the guy who led the team flight 93 correct let's roll yeah they don't know who he is they don't know who Tim Brown is one of the heroes from ground center or ground zero or many of the others who become well known yeah they don't know that stuff yeah you know as you bring it up no one ever really taught it until I, where I went to undergrad, the end of our, I guess you'll call it contemporary political philosophy history course.

9:11Right. Ended with Clash of Civilization, Sam Huntington versus El Saeed. And also within that class, we read Osama Bin Laden's letter to America. Yeah. So I had that aside, read it, we talked about it. And that was in your undergraduate? Yeah. But not in high school? Not in high school. That's the problem. Yeah. Yeah. So, and I'm certain that's not a universally experienced undergraduate. No, it's not. And the other statistic that is shocking is approximately 60 % of the residents in New York City were not born or not in New York City when it happened. Yeah, that's troubling. We can talk about that if you'd like to.

9:55No, I know I don't have you. I mean, I'm at Hoover, so I'm happy to chat about culture, politics and other national security issues, but it's not my. Let's see if we have a little time at the end, maybe, because I want to be a little focused because I think what we're here to talk about today is arguably one of the top one or two things that are on the ballot in California, other than the actual governor race itself. It's probably the number one issue on the ballot in California for this November. and when I first read your work, my head exploded. Why'd it explode, Chris? Well, okay. Now you quiz me, okay, Ben?

10:34No, I won't quiz you. No, no, here's my synthesis of your work. Yeah. So I start reading the work and a couple things come clear. Number one, this is being marketed as a one-time 5 % wealth tax on California billionaires. That's the marketing of it. And if you ask the AIs, I checked this this morning, the AIs will tell you that's what it is. Okay. And then I, so as I read your stuff, what I learned is, well, sort of, that is definitely in the law. However, the big thing that got my attention was that for the first time in California history, and I spent a lot of time working on this, it might be the first time in American history, maybe you know.

11:18we are going to change a state constitution to make it legal to tax people's life savings, to tax their net worth, to tax their assets. So if you think about, if we think about a simple thing like your 401k or your stock portfolio, you buy those stocks, you buy your NVIDIA stock with after tax dollars. And when you sell your NVIDIA stock, you pay tax on the gain from where you bought it to what you sold it at. And now for the first time in American history, they are going to take away a protection that says we are now allowed to tax the increased value of your asset without you receiving a gain for it.

12:05So it is a net worth tax. It is an asset seizure tax. It is a life savings tax on top of the fact that we get taxed with the money that we use to create those savings and assets. And we get taxed when we sell those savings and assets. Now we're going to be taxed on just holding those assets. And then the other thing that I saw was because it's a constitutional change, they are allowed to, with a majority vote in Sacramento, expand beyond the 200 billionaires and expand beyond 5%. In addition, what I thought I learned from your work was the proposal is a one-time deal to fix a gap between what the federal government is giving California, particularly around healthcare, to fix that gap because there's been a takedown of the funding from the feds, yes?

13:02And so this is to fix that funding. And it's a permanent problem with a one-time fix. So what are they going to do going forward? In addition, I spent the better part of 40 years in Silicon Valley, the tech industry, in the startup ecosystem. And here's what I know. Billionaires and wealthy entrepreneurs are incredibly mobile. There's 200 of them. our projections around here is that approximately 150 of them will leave. And I mean, I know probably 20 that have left that are not reported. Most of them don't hold a press conference when they leave. So the tax problem, even if it got fixed, your research says it doesn't fix it, even if all 200 of them paid.

13:51And even if it did fix it, it's a one-time fix. It's not going to fix it because A, even if they all paid it, wouldn't fix it. And B, a bunch of them are leaving. We can debate how many are going to leave or not leave. And so where this ends is if we vote yes on Prop 40, we give the state government in California the power to tax everybody's life savings with a majority vote. And most people don't know this. The Democrats have had a majority in California since the 70s and a super majority for, I'd have to double check, but approximately 20 years or so. Decade easily, yeah. Yeah. So a two-thirds vote, which I think is the majority, maybe you'll tell me, would be a slam dunk if you assume a Becerra, a governorship.

14:38So that's my reading of the facts. How did I do, Ben? You did great, Chris. Do you mind if I fill in some parts here? No, no, please. And educate me on anything I missed or if I'm mischaracterizing any of your work. I am not here for I'm not a spin asshole. I want to understand. I don't spin either. From you, what the facts are that you folks at Hoover uncovered as as you understand them. Let me just so, and because you will get some pushback on this, if you call this the first wealth tax in our nation's history, other economists, some at UC Berkeley prominently, but other places would say, no, there were these things called uniform property tax, general property taxes in the 1870s to 1920s.

15:27Now, and so what those were, and by the way, I'm not sure whether California is one of the 33 or so states that had it, but the function of those was the intent of those taxes was to get at tangible and intangible assets. Now, in practice, why they ended up not working out was because around the turn of the century, we had the rise of incorporation. right and with that with that ability for a business to outlive those assets can outlive a founder now you can transfer ownership long run more easily you had a intangible assets for not really hit and function by that so you are correct by calling this the first net worth tax in our nation's history you nailed that that's exact that's the difference by the way because if you say this is the first wealth tax, there are people in, we'll call it the left-leaning think tank space and left-leaning academia who are going to go, no, we always have had that property taxes.

16:26Well, okay, fine. I'll give you the technical difference there, even in practice, whether it covered it or not. This is certainly the first net worth tax. That's true. In American history. Yes. Yes. As far as I know. Yeah. And I don't want to put words in your mouth, but any person with an IQ larger than their shoe size knows that there's very few taxes that get deployed, that get repealed, right? Many people don't realize the very original income tax was supposed to be temporary. Yes. And so once you give it to them, it doesn't go away. There's no such thing as a temporary tax in the United States of America.

17:10And so is there anything else about the facts of what they proposed laws in Prop 40 that you think must be understood by people? So the next one, and you highlighted this, it's section 50310 of the Billionaire Tax Act. The legislature with two-thirds vote, and they say in the act, legislature and governor, but if you have two-thirds vote, you don't really need the governor. So we'll leave that there. Two-thirds vote of the legislature can amend any part of the act that furthers the purposes of the act. And that's broad. That means it just the money needs to generally go to health care, education, and some education and some food benefits, food security.

17:50If it's that broad, well, okay, one time can get struck. The rate can get changed. The threshold can get changed. Everything's on the table. And that's a very important thing to know. because the state of California, if it enacts it, can no longer credibly commit to the taxpayers of the state of California, whether those are billionaires or whether it's you, Chris, whether that tax will not hit them in some other way later. So you are correct. It is creating the constitutional infrastructure to tax this and other areas. And it's not, as you said, not likely to stop the billionaires. If it doesn't raise the revenue they think it's going to raise, well, then lower it, of course.

18:34Well, and if they really wanted it to be one time, they could have worded it as such. To me, it sounds like a complete and total smokescreen. Yes. Oh, that's full agreement with you, Chris. Okay. So you think, I know you guys like to stay very much fact-based, but to me, this looks like we are going to market the tax and construct the major things around a one-time 5 % billionaire tax. Everybody's going to say, yeah, fuck the billionaires. They should pay more, blah, blah, blah. And underneath it, they're sneaking in the ability to tax everybody's life savings and assets. In expectation, yes. I would not, because, and here's what you're relying on there.

19:18Even if, or call the center, thinks, well, it literally says one time. If the legislature amends it and they say it for the purpose of the act, who gets to adjudicate what for this purpose is the act? The state Supreme Court. To my knowledge, the state Supreme Court has zero Schwarzenegger appointees left. And if it does, it's one or two. And what that means is you're relying on Jerry Brown appointees, Newsom appointees, entirely to adjudicate whether the legislature, which is independent of party, the state Supreme Courts are generally deferential to legislatures. It's almost always true. It's not like the U.S.

20:03Supreme Court, is it? Well, even the U.S. Supreme Court in the recent rulings, you know, take the citizenship case, had Kavanaugh's whole position there was if the legislature wanted to enact some restrictions, they would allow, that would be totally constitutional. But the executive trying to do it himself, no. Translation, it needs to be a law, not an executive order. That's right. Yeah. So if the will of the people, the people via their legislature, which article one, that's supposed to be the largest, the strongest branch, right? The constitution is supposed to, the legislative branch is supposed to be the body.

20:38It's not supposed to be outsourced to the courts. And as an armchair political philosopher, we're talking federal. If the legislative branch isn't active, it doesn't surprise me that the executive and the judiciary have expanded their roles. Is there any way this could be taken to the Supreme Court out of the California Supreme Court to the federal Supreme Court? On that question, on furthering the purposes of the act, It's not clear on the specific provisions within the act. There are constitutional provisions that will certainly get challenged to the Supreme Court. And what are those? And this is within our research.

21:08But the first clear constitutional challenge, by the way, this may work through the state courts and then go to federal. And I'm not a tax attorney to walk you through that process in detail. But the first issue is the retroactive residency clause. The citizens of California are going to vote on this on November 3rd, 4th, and then it's going to be retroactive. Who pays that tax is effective retroactive to January 1st of the previous year. There is a language in the bill, they're called severability clauses, where it instructs courts. So the proponents knew this was a vulnerability. So what'd they do?

21:48they instruct courts to, oh, we'll reform the date to the vote date if necessary or other dates if that won't work or another date. So they know that that's suspect and that could get litigated to the Supreme Court. And the question there, they would have to resolve. The Supreme Court has been some could be deferential to retroactive taxes if the tax was already preexisting, but they have never ruled in favor of a completely new tax. And they have actually never ruled on something like this tax. So that's problem one, I guess. The next issue actually has to do with what residency means. Residency for income tax case law is a function of 183 days of residence or get it.

22:35You'll get it almost no matter how you do that. That's just under a full year, which would be 100 or right around. I think it's, yeah, we don't have to deal with leap years. But 183 days, you're residing in the state of California. the income tax system says, hey, you're going to pay it. You're going to be a resident, full-time resident. Okay. But you realize income when you earn, and then you have also income that's realized when you sell. And now it wants to apply that definition of residency, which has a specific meaning in income tax case law, to one day in time. That's going to be hard. I don't know how the court will rule on that, But it doesn't pass the, what we'll call it, fairness test of, well, so let's say, it's a tangible example of this.

23:21Mark Zuckerberg, let's say, he didn't leave in time, but he left in February. So let's say it passes. I'm not a tax attorney advising Zuckerberg, but let's say he would have owed$12 billion for the whole year. If he, in good faith, says, well, I was here a 12th of the year, I offer FTB$1 billion. That's not enough. Take me to the Supreme Court. Supreme Court, you go, he lived there a 12th of the year. He paid you a 12th of the tax. You know, you can't, that's what he owes. Pro rata basis. You know, go back to Sacramento and you lost. Seems fair to me, seems reasonable to me, but they're going to try and squeeze 183 days or a full year residence at the end of one day that doesn't pass.

24:04And so it's dormant commerce clause and other issues there, due process clause, apply. the the next issue is uh it has to do with california trying to tax assets that might not be in the state of california they want worldwide assets and they want california so taxes are not okay they pay five percent on their net worth but that net worth might not be taxable to california problem one and this is a big issue for someone like say rihanna who's a foreign national who the proponents say is in the base, but she's from Barbados. So the U.S. Congress has said that taxing authority of the federal government stops at the water's edge.

24:48And California now wants to say, actually, we're going to go over the water's edge. That A, runs into international tax treaties, but B, more importantly, it runs into the supremacy clause of the constitution. If Uncle Sam can't get it, California, sorry, you can't get it either. It's pretty straightforward. forward. And so if I'm Rihanna and I say I have all of my assets in my birth country, you can't tax me. Go F yourself. Yeah. Or you can tax the fraction that's in California, but you can't get those. And what about if I say, well, you can tax me on the NVIDIA shares that I own because they're a California-based company, but you can't tax me on the IBM shares that I own because they're a New York-based company.

25:27See that and that, and this is where we're really, that goes back up to the previous problem. You know, property tax, commercial property, residential property, it's a function of literally structure tied to site value of land and land itself. But if you move, if you, so if you move to Florida or Texas or wherever, Nevada, and you make their residency case, and the other part about residency, it's the 183 days, or if you don't have a plurality anywhere, a majority, it's, it happens where you, where's your intent to reside okay well what's intention to reside and then if you sell your shares in the other state well you know california and texas don't have uh capital gains tax rates so you're just okay you pay federal but california's not gonna be able to claim that so the question of well where where's the headquartered share is that the headquarters matter as much as okay where is that where is residency actually getting defined for realized income right uh and the billionaire tax act is going to run into issues with that i don't yeah with with all that i mean because it's trying to make it one day so here's the other thing so my assumption is that becerra will likely win the billionaires will leave and sometime in 27 28 that latest 29 they're going to lower the boom and they're going to come after a whole lot more than 200 people.

26:52Some of my friends say to me, well, here's the thing you don't get, Lockhead. They may go from billionaires to half a billionaires to 250 million to 100 million, but they're not going to go to 20 or 10. And here's why. They're not going to want to tax themselves. So the wealthier members of our friends who run the state in Sacramento are going to want to make sure that as that bar comes down, It doesn't come near any of them. And so that there will be a because of the self-interest of our elected officials in Sacramento, that will keep it from hitting more average people who aren't incredibly wealthy.

27:31What's your assessment of what will likely happen over time to this tax? Let's start with a recap on California's budget. State of California, since 2019, their tax revenues are up 55%, which is a lot, which is over$100 billion. Since 2019? Yes. Yeah, sorry. 2019, yes. Since 2019. We're up as a percent how much? Say, tell me again. 55%. That's what I thought you said, yeah. Yeah, 55%, which is more than the budget of 46 or 47 entire other states' budgets. That's the increase California has had in the last six years. And of course, it way surpasses the increase in inflation. No, that's inflation adjusted.

28:15No, no, I understand. It's inflation adjusted. So it's not like they could argue, oh, we're just increasing for inflation. The 55 includes the inflation increase. So it's actually more than 55 in absolute terms. Yes. Well, hold on. Let me think. I believe, so these are LAO numbers. I believe that they make them real, but they may be nominal. So I'll walk that back. Okay. But no matter what, they're up 55%. They're up 55%. And then, but tax revenues were up 68%. So Sacramento, the good stewards of your public dollars that they are, found a way to not just, you know, get incredible gains from part of partly and because of California's innovation economy that they can realize so much in income from the top and most productive firms.

29:04and they found a way to spend it all and more to the point where between now and 2030, so there's two reports out on this. The LAO put a report out in January where they projected the state was going to run a$93 billion deficit between now and 2030. They put out an updated report last week. They still haven't dug through yet. It's still near$50 billion, but it's not clear to me the assumption they've made and the difference there, so I won't testify on that difference yet. But yeah, so the state's facing a structural deficit. And we're certainly not 55 % better off. Let me speak for all people of California.

29:41Yeah. Chris, you hit the hammer on the head. As I view tax policy research, individuals are willing to pay a high tax bill if they receive enough in public services to compensate for it. Right? I think that's what it all comes down to. There's a price. I will pay high property taxes. if my schools are pretty good. But what happened in 2020? Per pupil, the state of California, when you combine with federal funding, spends about$28 ,000 per student. And in 2020, they closed the schools. And this is all known in the news, but we've done research on this here at Hoover. If you had dependents and you were a taxpayer in the state of California and you were in the upper income, you moved.

30:28Not everybody, obviously, but it was very predictive. Okay, you had a dependent. If you had dependents and you were a hopper income taxpayer in California, well, the schools are open in Florida and I'm paying all these taxes and what am I receiving for the bill? Online school. I'll tell you a funny story about this. Yeah. While all this was happening, Silicon Valley's moving to Austin and to Miami, right? I get a phone call from an entrepreneur CEO, buddy of mine I've known for 20 years. And he's like, dude, we're all moving to Austin. You're coming with us. We found this place. This is incredible homes.

31:02I think there's some houses you and your wife are going to like. You got to come with me this weekend. We're all moving to Austin. Like, what do you mean we're all moving to Austin? And then he started to go through the list of people that he and I knew that he said were all moving to Austin. And so I wasn't the only person who got this call or text. A whole bunch of people left Silicon Valley in that time frame. And I think the severity of it is not yet understood. No, and I've brought this up many places, but it's not a question of if you know someone who left California during COVID. It's if it's who you know who left California.

31:41Well, I checked this morning before in preparation for our discussion. And two or three of the AI say that roughly 10 million people have left California in the last five years. Yeah, no, this net out migration for California is a real issue since 2000. the state has lost$50 billion in taxable income. And since 2000, that's equals about$5 billion in tax revenue. That's just net migration. So we've lost people in, but we've lost people too. So I don't think the vast majority of people in California, even sophisticated people, even people in the world that I'm in, understand what is happening here.

32:20And so explain to me, Ben, And if you if you so the tax for sure opens the door to much more of this. Assuming that they will lower the bar and do much more of this, that's an assumption some people say is ridiculous and they defend it and so forth and so on. OK, they can have their opinion. Let's assume they do because you and I both know that's exactly what they're going to do. What will this mean over time for the average person who has whatever you might consider a reasonable net worth? Yeah. Well, so I think the biggest thing that's not getting translated to voters is that capital is mobile, but not just, okay, the billionaires left, but what were they doing with their capital while it was in California?

33:07So there's an investment, there's something called home bias. That means that investment dollars and venture capital dollars in particular, but investment dollars or capital do not flow far away from home. So what, and a good example of that is Americans are more likely to hold domestic stocks than international stocks because they recognize the brands that they see. So what that means is you want a diverse portfolio. One of the biggest adjustments that has to happen in 401ks is to get, okay, you need more international holdings. You need to diversify outside of what you know. Well, same thing happens with venture capital.

33:46so and what happens with any tax when you tax something you will get less of it whether that's through evasion people are are are understating their their assets worth or avoidance they legally moved and they moved with their capital with them so you have less if you have less capital in california what that means is it's going to translate into fewer venture capital dollars in the state of California over time. And so proponents, I've been asked, is the sky going to fall if it passes? No. Over time, it means less capital is going to be in the state of California, period. And here's the thing people miss.

34:27I did this work as well. So approximately 30 years ago, approximately 80 % of Hollywood movie companies, film companies made movies in California. And today, approximately 80 % of those companies make their filmed entertainment outside of California. So in roughly 30 years, and again, I might be off a little bit, but I'm directionally right. It's literally flipped 80-20 outside of California. And so I say to people, listen, you don't understand. Mark Cuban, a known Democrat, he was a surrogate for Kamala Harris in the last election season, came out and said, and I'm paraphrasing exactly, maybe you remember what he said, but he said something to the effect of only an insane entrepreneur would start a company in California.

35:14And he for sure said, I, Mark Cuban, will not be investing if this goes through in any California-based companies because not only will it affect him, it affects all of your employees. If I'm a software developer working at Anthropic today and I have a paper net worth of$2 million, I'm not giving you 5%. And I'm not going to go work for Anthropic in California. I'll go work for Anthropic in Florida where I don't have to pay this. So this is the other part of this that terrifies me. That is to say high net worth or high potential people who are building their life savings, building their net worth by owning things, by getting stock options, by getting RSUs, et cetera, et cetera.

36:03They're going to say, well, listen, in a post Zoom world, forget AI. In a post Zoom world, I don't need to fucking be anywhere. And so why would I stay in California if I'm a software developer being paid half a million dollars a year and I have two million dollars in stock options? Why would I not move immediately to Miami or Florida or anywhere else where this insanity doesn't exist? Poke holes in what I just said. Well, let me validate and then I'll poke. It's a direct tax on the return to entrepreneurship, return to entrepreneurial labor. That's certainly true. Hold on, Ben. Can you say what you just said?

36:37I don't think I've heard that said before. So entrepreneurs are also getting paid a wage. It's just discounted into the future. So there's a return to entrepreneurship that's not capitalized today times zero, but it is capitalized in the future and in expectation for the future. So if you tax asset ownerships or saving in particular, you are taxing the returns to entrepreneurship. and so what happens is you have by levying a wealth tax and i this is one of our papers you have raised the return to capital required in that taxing jurisdiction in order to break even so if you were to and we have a calculator that derives this and this is we danced around this earlier in our discussion if there's a threat of expropriation i.e this is a good example this Venezuela 20 years ago, we might take, there's a random, in the random distribution of outcomes for next year, there's a 1 % chance we might grab your oil rig.

37:47Well, what does that do? Well, first thing you can derive the equivalent capital income tax rate. So 1 % wealth tax would be equivalent to a 17 and a half percent capital income tax rate. So it raises the, so what does that mean? That, that, and that. Wow. That's a stunning stat. I didn't realize that then. Yeah. So then a 5 % permanent, so we can argue about permanent, but a 5 % wealth tax would be equivalent to a 52.5 % capital income tax rate. So this is one of our papers from earlier in the year. That was an early paper I worked on before this was a thing. It's slow math, slow theory, takes time to work through.

38:25But so what does that directly do? If there's a threat of expropriation tomorrow, you've raised the tax on capital. And what that means is I need a commensurate higher return if I'm going to invest in an oil rig in Venezuela. That's it. So the same thing is going to happen in California. Unless this venture is really promising, I'm not putting my capital there. You've raised - And even if it is, why would I give myself this kind of disadvantage to start? Certainly on the subnational level, you wouldn't. Why? I mean, here's the crazy thing about this. I mean, well, hold on. Let me give that argument.

39:05Let me poke the hole. If the return's high enough, sure. I mean, yeah. I mean, if you have, let's finish the Venezuela example. If you aren't near any installations that seem like they could be seized easily and and the oil's literally coming out of the ground without much capital, okay, maybe you try it. The return could be potentially very high, and the capital sink might be low. But isn't the flip side of that? I lived in Truckee in Tahoe for years. And isn't the flip side of that, hey, Reno's a pretty nice fucking place. Right? The flip side for California is the alternatives are not as unattractive as the proponents are making them out to be.

39:49No, listen, we, those of us who live here love California. I love California. My wife is a native Californian. We have, her parents are elderly. They live here where we take care of them. You know, there's, we have friends and deep roots here and, and we love it. And we live in Santa Cruz, California. It's incredibly beautiful and the ocean and all of it. Right. And we pay all the time. Boardwalk's awesome. The roller coaster's awesome. Beach is awesome. We have one of the greatest roller coasters in the world. Santa Cruz is sweet. Yeah. And interestingly enough, Ben, we have insane food here because chefs want to live here.

40:20It's good food. And so for a county of 300 ,000 people, we have some of the greatest. And it's an amazing place. Everybody here is here for those kinds of reasons, right? However, listen, Reno's nice. Vegas is nice. Austin's nice. San Antonio is beautiful. Miami's a ton of fun, et cetera, et cetera, et cetera. You know, and you look at in and out moving was really shocking to me. Right. And I really respect Lindsay Snyder, I believe is her name. And she's the third generation. She's the granddaughter of the founder. She's done an incredible job. Talk about a steward of a company and a brand. And she was very polite about it.

40:59But she just said it's too hard to run a business and raise a family in California. So we're moving to where? Tennessee. I don't know how much time you spent in Tennessee. I have friends that live there, and I've done a bunch of business there, and I have a niece that lives there, and I went to go see a football game there last year and a couple concerts. I'll tell you, yeah, I know it's a little muggy and they don't have an ocean, but man, oh man, Nashville, Tennessee is a beautiful place. And so it's not like we don't live in an incredible country, is it? No, no. And California became the winner too, right?

41:34A lot of GIs stationed out there. So why are they doing this, Ben? Like if you and I can look at this and go, this is going to crush entrepreneurship. I believe this is just my personal opinion. It is absolutely immoral to tax people's life savings because those life savings were built with after tax dollars. And so why? Oh, one other thing before I ask that. Okay. They are doing this. I don't know if you are aware of this. right now statistically is potentially the, and if it's not the, it's one of the greatest times for new business starts in American history. We are starting a little under half a million new businesses a month.

42:16It's 400 ,000 something. And some people, oh yeah, well, a lot of it's just people who got laid off and they're setting up their own company and they're just a one person company. Even still, that's still somebody that's decided to hang out their shingle rather than go get a job. That is an entrepreneurial act, even if it's a one-person entrepreneurial act. And so my point in all this is what could possibly be going on in the minds of Sacramento when we are experiencing arguably the greatest entrepreneurial boom in American history? Silicon Valley, California is the greatest place on planet Earth for entrepreneurial wealth creation.

42:55There's not a close second. And well, and of course, AI is creating massive new value, massive new entrepreneurship. AI is a great... California was on the ropes three years ago. And then look, it came right back. So why would they be doing, why would they be taxing entrepreneurship? Why would they be taxing people's life savings, people's net worth at the exact time in American history where we're having such a breakthrough in entrepreneurship? Well, let me break down two parts here. So there's the proponents who are the academic economists, and then there's literally the proponents on the ground, the SEIU in California.

43:34They have different motivations. I'll start with the SEIU. And let's talk about one big, beautiful bill. Let's talk about H.R. 1. H.R. 1 is probably the most substantial welfare reform since the 90s, since Bill Clinton. so and what is and what is the welfare reform at heart of the bill there's two parts there's two big ones the first is it institutes something called eligibility requirements for receiving uh medicaid so in california that's medi-cal so if you are not if you are able-bodied and you don't have dependents under 13 and you're not receiving snap and you're not disability and you're not any of these other things, and you don't work, volunteer, go to school for 80 hours a month, you will lose coverage.

44:27And our federal government's running a systemic deficit right now. We can have substantive debates about what kind of work requirements are reasonable. I think that that work, the eligibility requirement mirrors the 1990s reform. We can talk about that. And that equals about 90 of the 156 billion dollars the state of California is projected to lose over the next 10 years. So two-thirds of it is from eligibility requirements. And we'll talk about whether Billionaire Tax Act addresses it. The second part is something called a provider tax limitation. What's going on here? The Affordable Care Act created some real bad incentives for states to bring federal tax dollars down to their level.

45:12So what is that? So there's something called an FMAP percentage, and that is the amount of state healthcare spending that gets matched by the federal government. So traditional healthcare spending used to be one-to-one. State spends a dollar, our government comes and spends a dollar or less. Makes sense. The Affordable Care Act expanded that for certain populations to some people where it's up to 90%. So what happens now is, so it creates this game. Oh, every new dollar that California can spend on healthcare in these new categories, it's going to draw down more federal money. Some cases, nine to one.

45:51Every dollar I spend, Uncle Sam's going to spend nine. Great, free money. So what happens there? Well, it over time has created some perverse incentives in the healthcare policy space where the state of California levies something, where 49 states levy these, by the way, they're called provider taxes. where the state of California or any state levies a tax on healthcare providers. Healthcare providers pay that tax. That tax then, those tax dollars then go to the state of California. Then they go back to the healthcare providers and draw down federal matching funds. So the state is better off. The healthcare companies are better off.

46:29And the only one worse off is the federal taxpayer, which, believe it or not, Chris, is you and I. I know, I pay a lot of tax, Ben. That's right. So the interesting thing here is this has been flagged as an issue for years. It was flagged by the Biden administration, and California's tax in particular was flagged by the Biden administration. So it's an issue because the federal government doesn't have a balanced budget, and the states are drawing down all these dollars. Famously, by the way, California health care providers lobbied to increase this tax in the last 10 years. They lobbied to increase it.

47:00They didn't want to cut spending and decrease the taxes, Ben? No, no. They wanted more money to go to them. So it's, yeah, so that's, so one big, beautiful bill limited the amount that it didn't get rid of provider tax cuts. Around 2028, the state will start to have a limit. States will have a limit and they'll slowly ratchet down. So that's the other 60 billion or so over the 10 years, but it's backloaded. So now, okay, now we have the setting. State over the next 10 years is going to lose 156 billion, but the state doesn't actually lose. getting 156 billion that they were never intended to be getting.

47:38And now they're upset that they're losing it. Well, yeah, they don't have it. They didn't have it, but it's a decrease in the rate of income. The federal government closed the loophole, essentially. That's right. So it's a decrease in the rate of increase. There's only one year in the 10 where the state actually has a decrease. And I love how they position it as a decrease. No, it's a decrease in the amount of the increase. It's still not decreasing. No, no. The revenues are still going to go up, except for one year. There's one year, 2026, well, 2027 was the discrete year, fiscal year 2627. But now, because of newly approved provider taxes right before H.R.

48:141, if you, LAO's report from last week, the federal Medicaid transfers to the state of California are 117 previous fiscal year, they're projected to be 137. It went up. So they're drawn down more next year. There's no immediate crisis. There's no immediate fiscal crisis. But, you know, never let, you know, Rahm Emanuel never let a good crisis go to waste. So what happens here? Well, let's go through motivations of SCIU. They say they need this$100 billion to backfill. So first thing, the Billionaire Tax Act does not require that the legislature actually backfill the population that's going to lose coverage.

48:51It doesn't require it. It's not in there. translation it's a slush fund we can do anything with we're just using this problem as the excuse as the lost leader so that we can don't look over here look over there that's right that's exactly right it does not require that it actually backfills the population so that's that's important that's point one and no one no one's talking about that because that's inconvenient because it totally undermines the narrative that this is to backfill reductions which doesn't require the state actually take on that population uh the second is just should states be using provider taxes the way they were no i don't think so but we can that's it um okay now so the seiu is using they have their reason they don't want health care dollars to go down to the state so they went to bat to to this is why they're getting behind it um the academic economists a little more interesting in that one of them has for the better part of the last two decades been arguing for wealth taxes in the U.S.

49:53for that length of time. And him and his, at least one of his co-authors, the French, and one of their arguments is that, well, concentration of wealth is going to lead to oligarchy in the United States. And my pushback on that framing and historical understanding is that in France, there's a long history of a rentier class. you have wealth because you use government contracts and connections to perpetuate that wealth so the wealthiest people in you know france 100 years ago very similar list wealthiest people in the united states 100 years ago the rockefellers where are they now last two decades governor of west virginia okay that's fine the the wealthiest person in the U.S.

50:42today is Elon Musk? And how much did his influence buy him? Maybe 3 % federal payroll reduction, maybe. And that's squinting. And here's the other problem nobody talks about. We talked earlier about the entrepreneurial boom in the United States. If you do the similar analysis on much of Europe, not all of Europe, much of Europe, what you discover is the degree to which you believe new business starts is a leading indicator, which we believe around here yeah um there are no new business starts there's no entrepreneurship in france there's no entrepreneurship in the uk and in some of the more socialist countries that people point to as socialist countries what have we seen happen we've seen attempts at wealth taxes destroy those economies and now they're tilting even further back towards capitalism with you you may know better than me, but Sweden is a great example.

51:38Norway, if I'm not mistaken, is also a good example. You probably, you know more about this than I do, but the reality is many of these European countries, whether through wealth, wealth taxes, or just the, their anti-entrepreneurial policies, taxes, and such entrepreneurship is essentially, again, there's some exceptions, but through much of Europe, entrepreneurship is actually stopped. Yeah. I mean, I can't speak too much to the entrepreneur culture of Europe. It's not my area. But the OECD nations in Europe, there were 12 wealth taxes in 1990, and there's three today. So France repealed theirs.

52:16Germany, the Supreme Court struck their down. Denmark repealed theirs. Low interest rate environment. It really is a... So if some of the most socialist countries in the world, some of the most anti-capitalist socialist democracies, anti-entrepreneur, tried this and threw it out, why aren't we learning from this, Ben? You know, there's, it's a sense of justice and charity, charity and maybe justice, depending on where you sit, that in our country and in the West, we view basic need provision as an important social and public goal. And I agree. Right. I want people to have access to education, basic infrastructure, heck, even, you know, health care to some extent and whether it's co-pays and that, wherever.

53:09But we can argue about what basic needs are. But in general, yeah, I support people having basic needs as an act of charity and justice. But over that basic needs threshold, I don't, whoever, however you come about your wealth, I'm indifferent. And it's so actually, if the tax the rich mantra is rooted in something deeper than I'll, that will, it will always be with us. It's the scourge of Cain. It's envy. It really is that, it's that far back. It's envy. Being thankful for what we have and is not a, being thankful is not a virtue anymore in some parts of this nation. And so, yeah, I, you know, the downwardly mobile millennials are the trendy catchphrase for who elected Mamdani.

53:59And that's, that's plausibly true in that. And we should say it's important because I think it's part of the picture. Overly educated, downwardly mobile. it's fascinating if you look at the data and i have today the most mobile upwardly mobile people in the united states are undereducated yeah and they're and they're thriving like in pretty extraordinary ways and the overly educated are some of the most downwindly mobile americans we've ever had yeah it's weird right it's like what are we teaching them well what's And in my education, especially the last, there were several years in the PhD where I was there at 8 a.m.

54:43and leaving past midnight regularly just working and reading tax law or whatever my advisor wanted me to work through. And I slept on the floor of my office in grad school many times. And that's not the typical experience for most people in a PhD anymore. It might have been in his era. Here's the other interesting thing people don't realize. The New York Times did a story about this several years ago, and I'll be factually incorrect, but very directionally right. Everybody at Yale gets an 80 or better. Oh, yeah. Right? I mean, nobody fails. Yeah. So we've taken the philosophy of we're not keeping score at T-Ball and we've applied it to advanced education, never mind high school.

55:23Yeah, never mind. Yeah, that's got to be part of it. Yeah, everybody's just the same. The disproportionate number of people at Harvard, Yale, Stanford, fill in the blank, are getting 80s plus. I don't know. Grade three math was the hardest 12 years of my life, but that doesn't sound right to me. Yeah, that's funny. It's not far from true either. No, no. And I, yeah, I really do think it's, there's envy. I don't, Elon Musk has a trillion dollars. All right. Right. Over that basic needs threshold, we should all be taxed. Well, and this is the other thing to understand. People don't seem to get how wealth is created.

56:01Bernie, Bernie, Bernie, Bernie Sanders is a is obsessed with Elon Musk. And he says, well, this man is worth this much in the average American fill in the blank. And, of course, the assumption is he's stealing that money from everybody else. And they don't understand that. No, no. He created net new wealth, net new value that accrued to him and everybody who works with him. I mean, the number of DECA millionaires that got created at the SpaceX IPO is in the hundreds. Anthropics going to be the biggest IPO ever. And it's going to make I mean, people are already talking in the Bay Area what the Anthropic IPO is going to do to real estate, because there's so many people who are decamillionaires and beyond that the people are already bracing.

56:51And of course, the OpenAI IPO is going to come after that. And so those two companies, assuming they go public in roughly the next year or so, are the outcome of the value they created will change real estate in the Bay Area. And so they didn't take, Anthropic didn't steal money from the high school teacher. That's not what happened. It's not, they have this attitude that we're divvying up the same pie as opposed to what Americans have done for 250 years, which is make a lot of more pies. Make pie. The pie is infinite, potentially. So I want to go back to a question I asked you earlier. Friends of mine say, hey, we normal people or more normal people, not billionaires, don't have to worry about Sacramento coming for us because they won't lower the bar to anywhere near what the elected officials net worth is.

57:42Does that make any sense to you? Is that a protection at all for normal people? I mean, the income tax started above where the politicians made it as well. That's my armchair response to that. It happens to be mine too. Right? Do you trust? Seriously, let's take that logic all the way through. Say you pass it, raises$100 billion one time to fund more healthcare funding, even if it doesn't go to what they say it's going to go to. Okay, fine. What happens in 2029 when it's gone, when it's run out? What happens? They're going to pass it again. Okay, yeah, they're going to make it permanent at that point.

58:21Okay, fine. I make it permanent at that point. And what's the wealth rate? What's the threshold? Oh, the threshold's not raising what it needs to anymore because all those people left. Okay. Or enough of them left. Well, we're going to lower it. And as long as they've created the permanent liability, which potentially they could be making there, then the incentives for the tax to keep going, to raise the revenue it needs are still there. so unless they want to have a real and they should lower kc conservative governance is a virtue the state of california had a has a wealth of tax revenue a wealth of it and that they can't balance their budget is is a is a abysmal and is is wrong that that we talk about if people get high on their horse about morality and billionaires we built a hoover dam in five years Okay.

59:14The train to nowhere is, I believe, 15 billion already and is projected to be well over 100. The train to nowhere is now from Merced to, I don't know where it is anymore. It sure as hell is in San Francisco to LA, which is what it was supposed to be. Right. Yeah. It's laughable. And there's no track. There's no train. We spent 24 billion on homeless and homelessness increased roughly 25%. Homelessness in my county increased 13 % last year. Yeah. Yeah, the homelessness industrial complex. And so I think this is the other problem. Grass is the problem here. Well, yes, and business people look at it.

59:53Not just business people. I saw Dana Carvey talking to, what's his other comedian buddy? The two of them look the same. Anyway, Dana Carvey talking to one of his comedian buddies saying, look, if you were running a household and somebody was spending all kinds of money, and they were creating debt, you'd go to them and say, hey, what are you doing? What are you buying? How can we pair some of this back? We can't afford this. And you'd stop them or cut up their credit card. And so we can't build a bridge. We can't fix roads. We can't get water to fire hydrants. We can't even keep the water in the state.

1:00:30We let it flow out to the Pacific. We can't have real disagreements and discussions about water use. and we built a hoover dam in five years yeah the the train program i looked it up this morning the the train authority or whatever it's called was formed roughly 15 years ago yeah and so that's the other part of this if we if we lived in a part of the world if we lived in let's say let's just take singapore as an example of effective government would that be a fair example sure okay If we were in Singapore, everything would be a third less expensive and everything would be built in a third of the time.

1:01:10Again, directionally, right? There are places in the world that are very effective at making big things happen. We are not one of those places anymore. No. And no one wants to have, I mean, no one wants to have the conversation. And I actually brought this up. We were approached by, we asked, okay, what are ways that California can reduce costs? this isn't well known but as well known as it probably should be texas used to have a real issue with torts with plaintiff's attorneys and they had mass tort reform in different areas these are the 90s 2000s etc that was the basis of the strong business environment okay we're gonna cap payouts for x different type of issues no you're not gonna sue for falling with the shopping cart when it's sleeting out and get$10 million.

1:02:01There's a whole subclass of even individuals who will say, yeah, that's your handout. That's your hand up. No, no, it's not. Like, this is not, we can't run a society if that's what we're going to base it on. Insurance is there to make things fair and make people whole. It's not there for people to get settlements out for life. And it's certainly Plates' attorneys getting fees for whatever. But is Newsom or Becerra or even, I don't even see it. Has Hilton even gotten behind tort reform for California? I don't know. I haven't heard him say that, but I don't know. Yeah. So, I mean, tort reform would change the nation.

1:02:42Would change it, for sure. Well, and look, I've always thought, look, it's really simple. In civil matters, if I bring a case against you, I lose that case. I pay your legal fees plus 20 % aggravation compensation. That fixes a lot of shit right away. That would cost that. I agree. Chris, I would get behind your campaign for governor tomorrow. I'm being told that more often than I would like to hear. There is no way. I would tell so many people to go fuck themselves. There's no chance. So the 4 Prop 40 campaign is very strong. Right now, the pollsters are showing this thing is going to pass. I didn't check Polymarket.

1:03:25Do you happen to know what the... Polymarket is reverse in that it's projected majority no. I don't know the most recent numbers. I can... Oh, yeah. Why don't you pull it up? That would be very interesting. And so my question as you're pulling that up is, let's just call them the forces of sanity that I believe, Ben, you are the leader of. I'm appointing you the leader of the forces of sanity on this topic. I've been very clear about this. I've been loud about this from, you know, the very earlier parts of this year when I started consuming your work. And A, almost nobody's talking about it. And B, most people have no idea what this means.

1:04:06So the pro let's create a life savings tax team is out marketing the sanity team in a material way. And as a three time public company chief marketing officer, I find that very upsetting. but uh you and i will blame you and i have so far done a pretty piss poor job of educating the voters of california what this bait and switch really is about and so do we have a chance here to educate people about this in a way because right now it's it looks spooky to me the fact that most people have no understanding of any of the level of detail that you and i have been talking about yeah uh well so i'll start this uh polymarket has 29 chance of passing so you can do with that so people putting their money there i guess well we'll start there okay well i like that and then let's this is my closing argument's the wrong word but it's it was actually a question in a presentation and i i think it hits the vibe the proponents are saying that there's no way the billionaires could have left in time, that people don't really move.

1:05:16In general, people don't move because of high taxes. That's all. We're all just making that up, even though we've seen it and know people do it. And the response to that is, in the last six years, we know people with very high net worth who left. Elon Musk was in the state of California in 2020. Larry Ellison was in the state of California in 2020. Peter Thiel, Joe Lonsdale, and then recently Sergey Brin, Larry Page, they were all here and now they're moving. That is real. That's the problem. So when, when, and you will meet people who will say, oh, and you've described some of these people in our conversation today who will say, oh, there's no way they left in time.

1:06:03We're going to get the revenue anyways. I think the closing argument is, no, people are moving and they're doing it publicly and it's been happening for the last 10 years. And actually you guys are wrong. Well, and I could give you a list of people I know who are gone that are not in the news. Yeah, no, that's. And it's a long list. And I'm nowhere near a billionaire. So it's not like all my friends are billionaires. I do have some billionaire friends. I've been in Silicon Valley for a very long time. And it's weird how many phone calls I get from them with Texas and Florida numbers on them. Yeah, that's right.

1:06:39So doing a bad job, it's about actually confronting the people in your day-to-day life when it comes up and say, no, this has consequences for the state. That's where it's on us. We need to be more willing to engage in the conversations with what I will call the NPR, New York Time op-ed reading. Center left, sure. I don't know, center, wherever you want to put that and say, no, the experts they're bringing on have been pushing this. The same experts pushing the one-time wealth tax for the HR1 reductions also pushed a wealth tax during COVID for California. Right. So they've been wanting this. They've made this their academic project to make California an experiment.

1:07:21But good governance is not an academic experiment. It's about stewarding public funds to create public goods, to make it easier to grow a business, to get to work via roads or public infrastructure or educate your children or retire safely or be safe. Those are the goals of good governance. They're not, let me just. You know, the average murderer in the state of California, the average convicted murderer in the state of California is out in 15 years and the average convicted rapist is out in five. I didn't want to. I don't want to know that. But important to know. Right. Awful. No, but again, we will pay for it if we get it.

1:07:57But when you let Manson murderers out, look, a female judge in Santa Clara, California, which is the heart of Silicon Valley, recently let out a guy named Christopher Hubbard. Christopher Hubbard's nickname is the pillowcase rapist. He's admitted to 40 plus rapes. She just let him out in the last year or so. It happens all the time in California. Well, whether public safety will be addressed by the state of California tomorrow is not, and Borbuk-Bissaro is not, it's probably not happening. So I'll leave that there. It's probably not happening, is it? Yeah. So what can the average person do if I'm somebody who says, you know what?

1:08:36I love California. I love the fact that this is one of the most creative and innovative places in the world. It breaks my heart that 80 % of the movies used to get made here and 80 % of them are now not here. It breaks my heart that some of the greatest companies in California history have left California in and out burger Chevron. It's a long, long, long, long list, Oracle, Hewlett Packard. Hewlett Packard is not in California anymore. The company that created Silicon Valley. And it's a very, very long, scary list, right? And so I look at that and say, we have the greatest weather in the country.

1:09:11There's no question. We have incredible beauty here. I love to ski. I love to surf. I love, you know, like many of us do, this is an amazing place. And I came here because it was the golden state. I don't have a high school diploma then. Right. I started my first company at 18 years old. I'm the product of a single mother, a working class single mother. Right. I'm not supposed to be here. Well, that's called the American dream. And I'm very proud of this country for that, that you can come from nothing and build whatever you are capable of building to your utmost capability here in the United States.

1:09:49and I want more of that. This boom in entrepreneurship is incredibly exciting for me. I think we should be teaching entrepreneurship at every single level, et cetera, et cetera, et cetera. And so I think, you know, it's simplistic to some, but it works. There are takers and there are makers and we need to empower the makers. And on the social safety net, I was also born in Canada, which is now a radically socialist country. But look, I'm not some mega maniac act on the right? Far from it. I believe in a social safety net. I don't want people who are sick to die because we don't give them health care.

1:10:26I want people to be protected. I want there to be equality and equal opportunity for all these things that most Americans agree about. But we have to empower the makers so that we have the funds to take care of the people who can't take care of themselves. And we have to root out, to your point, on where is the bar for the social safety net, all of the people who are actually takers as distinct from the people who actually need our benevolence. Americans are the most generous country in the world, right? Individually, we give more than any others. And so this is a very generous country, but we want the focus to be on the, we want the emphasis on the rights to law.

1:11:05And right now here in California, I find this terrifying because I would hate to see what happened to Hollywood happen to Silicon Valley. And what I would like to see is Silicon Valley continue to be Silicon Valley and for Hollywood to come back and all the other things that used to be in California to come back. Yeah, that's right. That's right. Is there anything else, Ben, that you would like people broadly to know about this proposed new law? No, we had a great conference. This is great. I love chatting with you about this. Okay. Just be willing to engage with it and be willing to engage people who haven't thought much about it and let them know your thoughts.

1:11:45Don't, don't, don't. And can I ask you a favor? Sure. Could you go on a podcast speaking tour? Where would you like me to speak? Well, I don't, everywhere. I'd like you to go everywhere. I don't know much about Hoover. You might know my friend, do you know Iron Mike Steadman by any chance? He's a Hoover fellow. I don't. I don't know what the technical program name is, but it's an entrepreneurial program. He's a veteran and he's black and he's a very successful entrepreneur. And he was recruited by somebody at Hoover. They identified him as such an awesome guy because they don't make more legendary men or legendary Americans than Iron Mike Steadman.

1:12:25I will tell you that. Also a product of a single mother. And so I know there's some very innovative things happening at Hoover. But if you like, we can have an offline discussion on sort of how to get you and others more visible. But, you know, if I was the chief marketing officer working for Secretary Rice, I would be very busy getting you guys out right now. Well, they have. I do about one a week. Raul Garcia at Hoover has been very helpful. It's been great. Maybe Raul and I should speak because I'd like you to be doing three a day. Three a day. Okay. Well, sure. I don't know if there's the demand for that, but if you find it, I'll have that.

1:13:07Listen, if it was up to me, you'd be on every major network and on every major website all day, every day right now. Yeah, I'm not sure they would have me, actually. Yeah, well, listen, the truth will set us free and the lies are about to crush us. So I can't thank you enough, Ben, for your work. Your colleagues, please thank them for me as well. Hoover is an incredible organization and has been for so long, so needed, probably more needed now than ever. And, you know, I just want to say a big thank you for your work and for this time together. And if I can help in any way between now and the election, you know, I'm a three-time public company CMO.

1:13:46There's a few people who think I know a couple of things about marketing. And if there's any way I can help Hoover as a volunteer get this message out, I'm not seeking anything. I just want to get this message out and help you guys share the facts with people so that when they go to the polls in November, they know what they're voting for. And I'll say this one last thing at the end. I forget the name of the prop. You might remember several years ago, there was a prop that got voted into law and the way it was marketed, I think it was about four or five years ago. The way it was marketed was roughly this.

1:14:16They said, hey, listen, there's all these bazillionaires in Malibu who bought their properties during the Nixon administration. and when they leave their properties to their kids, the tax assessment stays back for when the property was purchased. That's bullshit. We want them to raise the property taxes when there's a change of hands to current levels. And we said, yeah, fuck the assholes in the middle. And we signed this thing into law. Okay, here's what that means. My wife's name is Carrie Cosentino. The Cosentino family farm opened in 1945 Her father's 95 years old Carrie and her sister run the farm today Today, Ben, we are the last working farm open to the public in San Jose, California Last summer, San Jose Mayor Matt Mayhem Gave my father-in-law, Phil Cosentino, accommodation For 80 years of service on our 80th birthday To the citizens of California and acknowledged us publicly and legally as the last farm in California.

1:15:22As this prop became law, on the eve of it becoming law, we were forced to transfer the ownership of our farm out of my in-law's names into his daughter's names to avoid this tax. Because we run this farm as a labor of love. It's the dumbest business in the history of dumb businesses. There's a reason we're the last one. And it's because the value of the land is infinitely more valuable than the business that you can build as a farm on the land. Okay, so we avoided it there. Guess what? We can't leave the farm, the last farm in San Jose, California, J &P, Costantino Family Farm. We cannot leave it to our offspring.

1:16:08Why? Why? Because it would come up to current levels of tax and there's no amount of business you could build off of our 600 fruit trees that would allow you to pay for that. So our farm will go away. And so that one tax that was marketed as one thing, but in reality was another, is right now destroying every single family farm in the state of California. And nobody is talking about it. And this tax is being marketed in almost an identical way. Wow. Yeah, I'm sorry your family went through that. Well, and you know what we're going to do, Ben? We're going to fight it. We're going to repeal it. Well, we're going to fight it.

1:16:52We're trying to repeal this tax on our farm. Good. And if we can't, we've already negotiated a deal with the city of San Jose. we will donate it to them because we don't want bulldozers on those trees. And if the laws are, if the tax laws are so punitive that our family can't afford to keep running the farm, then we would rather give the farm to the government fucking us so that the land is preserved and is a historical location in California as the last working farm, then sell it for profit and watch bulldozers destroy our farm. We'd rather give it to the assholes who forced us to do this than tear down the trees.

1:17:37That's the way my wife and her sisters feel. It's awful. I mean, and why? And for what? What? And for what revenue? And for trade-offs, I was speechless. Chris, I... But this is the very real thing that's happening right now. It's real. They're doing it. They always... And they've done it. It's not a big deal. I'm living it. I'm living it. We're trying to figure out a way that our offspring can continue. And right now, it looks like there is no way. Wow. They have no homestead exemption or anything like that? No, this is what they wanted to do. This law to go get the assholes in Malibu was really a law to be able to tax all the small businesses where the entrepreneur had bought the property for the business.

1:18:22So if you were the mechanic and you worked 50 years and you bought the garage that you were in and the value of your life's work was primarily in the building, less so in the garage business. And your children were apprenticing underneath you, hoping to continue. That is now an impossibility in the state of California. Wow. So it affects all sorts of small businesses like that and every single family farm. Wow. Yeah. Ben, I can't thank you enough. Again, my hand is raised. I would happily be the unofficial chief marketing officer of this campaign for you and the folks at Hoover if you wanted me to.

1:19:03I think you're doing God's work. And I really hope that we can educate the voters of California in time to understand that the California we want is a benevolent, legendary California where people in need are taken care of and where we create an environment where creativity and innovation thrive here like nowhere else. That has been the case in the past. And it can be even more so the case in the future. but man, we need to turn around and we need it fast. Yep, we do. And it starts today. Starts today. Let's not pass Prop 40 and let's repeal whatever lie you just talked about or get a homestead exemption or something.

1:19:37That's right. Okay, great. All right, Ben. Thank you so much for your time. Again, my hand is raised. Let me know how I can help and Godspeed. Okay, thanks, Chris. Godspeed to you as well. That was the legendary Dr. Benjamin Robert Yarosh. He's a researcher at the Hoover Institute. a PhD researcher. And if you go to Lockhead.com, that's L-O-C-H-H-E-A-D.com right now and check the show notes for this episode, you will see links to all of Hoover's reports on this, as well as our deep dive synthesizing this conversation and the things that we glean from Dr. Ben and his colleagues reporting on this issue.

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