Millionaire Scraps San Francisco Move Over Proposed Wealth Tax

A young millionaire entrepreneur has abandoned plans to relocate his business to San Francisco, citing concerns over California's proposed wealth tax and the state's political climate.

Emil Barr, the 23-year-old founder of Flashpass, a company that helps laid-off workers find new employment, had already signed a personal lease in San Francisco with the intention of moving his business to the state afterward. However, upon learning about Proposition 40, a proposed one-time 5% tax on billionaires residing in California, Barr changed his mind.

"I just didn't feel welcomed as an entrepreneur," Barr told The California Post. "Obviously, I'm a little bit more sensitive to this because I work with government, but I said, why would I move to a state where the government is basically, first of all, villainizing entrepreneurs and saying that, for some reason, if you built a successful chip manufacturing company, the fact that the healthcare system isn't working is your fault?"

Proposition 40, slated for the November 3 ballot, would target the accumulated wealth of the state's wealthiest residents, with the revenue intended to bolster the state's healthcare system. While the tax as proposed would not directly affect Barr, he fears it could set a precedent for taxing individuals with smaller fortunes in the future. "Today it's the billionaires," Barr said, expressing concern that future proposals could target people worth $10 million or more.

Barr immigrated to the U.S. from Russia at the age of three and founded Flashpass two years ago, after selling his first company, Step Up Social, which he started at 18. Flashpass collaborates with government agencies to facilitate worker retraining and job placement. Barr initially saw California as an ideal location for Flashpass due to its concentration of artificial intelligence companies and research labs, anticipating significant job displacement due to AI advancements.

California Governor Gavin Newsom has voiced opposition to Proposition 40. Supporters, including Debru Carthan, vice president of SEIU-United Healthcare Workers West, argue the measure is necessary to offset potential federal healthcare funding losses and dismiss concerns about wealthy residents leaving the state.

Despite these opposing viewpoints, Barr maintains that his decision was driven by more than just tax avoidance. He stated he was willing to accept the higher cost of doing business in California but ultimately felt deterred by what he perceived as a hostile attitude towards successful entrepreneurs. "Why would I move to a state where the government is basically, first of all, villainizing entrepreneurs," Barr stated.

Barr's decision could have wider implications, as he suggested other founders share his reservations about California's business environment, though many are hesitant to speak out publicly. He believes entrepreneurs who disagree with the state's policies should express their dissent through business decisions rather than investing in a state whose leaders they feel are targeting them.

Barr's company currently remains based in Columbus, Ohio, its founding location. While he has not definitively ruled out relocating the business from Ohio, California is no longer under consideration. "I'm not even 100% sure we'll keep the business in Ohio," Barr said. "But I definitely know it's not going to be California just based off of the political and business rhetoric that's coming out of that state right now."