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California entrepreneur Eric Schiffer warned that the state’s proposed billionaire wealth tax could drive some of its most successful business leaders out of California, predicting a “giant sucking sound” of entrepreneurs heading for the exits if voters approve the measure.

Schiffer, chairman of family office Patriarch and CEO of Reputation Management Consultants, told FOX Business that he works with several billionaire clients, including some in California, and said many are unhappy about the proposal.

“I think the impact of this passing in California is a giant sucking sound of all of these entrepreneurs being sucked out of California because they’re just not going to want to stay,” Schiffer said.

“Why would anyone stay if they have spent their life building wealth that they were already taxed on?” he continued.

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“You’re going to see some of the most brilliant, most successful men and women that have been the cornerstone of tax revenue and donational revenue and leading companies that are employing fleets of individuals and scores of individuals, they’re going to say, ‘No mas, I’m out. Goodbye,’ because they don’t feel respected or appreciated and they feel under attack,” Schiffer said.

Proposition 40, which is on the Nov. 3 ballot in California, would impose a one-time tax equal to 5% of net worth on billionaires who were California residents on Jan. 1, 2026.

The tax would be due in 2027, although payments could be spread over five years at an additional cost. Real estate, pensions and retirement accounts generally would be excluded from the tax.

The measure has been endorsed by the California Democratic Party, while some notable leaders, including Gov. Gavin Newsom, have expressed opposition. California Republican gubernatorial candidate Steve Hilton has also warned that the billionaire tax would further strain the state’s economy.

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Schiffer argued that the tax could also affect Californians without billion-dollar fortunes, saying the consequences could reach their workplaces and economic opportunities.

“I think some of the consequences, if you’re a working individual in California, is there’s going to be less opportunity,” Schiffer said.

He argued that if entrepreneurs relocate, the state could lose businesses, jobs, investment and tax revenue.

“If you think California, when you have all these billionaires bolt, isn’t gonna hurt and isn’t going to create problems and isn’t going to reduce tax revenue and reduce jobs, boy, you’re smoking some of the stuff that they’re selling in California in some of these stores,” he said.

Schiffer also argued that the state could eventually seek to impose similar taxes on people with smaller fortunes.

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“If they’re going after billionaires, then the next thing is they’re going after you if you’re worth hundreds of millions of dollars,” he said.

California’s nonpartisan Legislative Analyst’s Office said “some billionaires” may decide to leave the state in response to the tax, taking with them the income tax revenue they currently generate.

The LAO estimates those and other behavioral responses could reduce state income tax revenue by less than $1 billion per year. At the same time, it estimates the wealth tax would temporarily generate tens of billions of dollars over several years.

FOX Business asked Schiffer directly whether he would leave California if the policy eventually expanded beyond billionaires.

“If it got to the point where they’re talking about people that may be worth more than a couple hundred million dollars in that range, California, unfortunately, would be in my rearview mirror,” Schiffer said.

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Billionaire Mark Cuban has separately argued that billionaire founders can be “cash poor, stock rich” because much of their net worth can consist of company shares rather than cash available to pay a wealth tax.

Schiffer made a similar point, saying some billionaires hold much of their wealth in stock, including shares of private companies.

Rep. Ro Khanna, D-Calif., one of the proponents of the wealth tax, has previously argued that the levy would help preserve health care for working-class Californians. He also said the “Sacramento establishment” and lobbyists opposing the measure were “blatantly out of touch.”

Schiffer argued that the larger question is what the proposal tells people trying to build companies and accumulate wealth in California.

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“You’re changing the contract that America has sent to entrepreneurs,” he said. “And you’re saying, this isn’t a good place to do business.”

“What we don’t want to ever do is to lose the immense power and immense creative engines that the greatest entrepreneurs in the world continue to generate on behalf of the United States of America,” Schiffer added.

The global crude oil market has entered a new phase of uncertainty after Saudi Arabia suspended crude loadings at its Red Sea port of Yanbu and cancelled some crude cargoes to Europe following drone attacks on its strategic East-West Pipeline. The development comes at a time when oil prices have already crossed the psychologically important $100-per-barrel level amid prolonged Middle East tensions. While markets had previously assumed that oil transportation routes would remain partially functional despite the regional conflict, the latest attack has exposed the vulnerability of alternative export routes and raised concerns about a potential supply crunch.

Why oil prices remained below $100 earlier and why the current situation is different

Since the outbreak of the broader Middle East conflict, crude oil prices have repeatedly spiked on fears of supply disruptions. However, prices mostly remained below $100 because traders believed a complete blockade of major oil transit routes, especially the Strait of Hormuz, was unlikely. Saudi Arabia’s East-West Pipeline, which carries crude from eastern oil fields to the Red Sea port of Yanbu, served as a crucial alternative route. The latest drone attacks have now disrupted that backup infrastructure, forcing the suspension of Yanbu loadings. Markets are no longer pricing merely a geopolitical risk premium; they are increasingly worried about an actual loss of export capacity and physical supply availability.

Saudi Arabia’s dominant role in the global oil market

Saudi Arabia remains the world’s largest crude exporter and one of the few producers with meaningful spare production capacity. The kingdom traditionally exports between 6 and 7 million barrels per day and plays a central role in balancing global oil markets through OPEC+. The East-West Pipeline has become particularly important because it allows Saudi crude to bypass the Strait of Hormuz and reach global markets through the Red Sea. ” When Saudi supply is threatened, there are limited options available to quickly compensate for lost volumes, resulting in sharp price volatility.

Why are the Houthis and their allies targeting energy infrastructure?

The attacks on Saudi energy infrastructure are part of a broader strategy aimed at increasing economic pressure on Saudi Arabia and its allies. Since maritime restrictions have already affected shipping routes in the Red Sea and Bab-el-Mandeb Strait, attacking the East-West Pipeline further reduces Saudi Arabia’s ability to bypass regional chokepoints. From a strategic perspective, energy infrastructure represents a high-value target because even temporary disruptions can influence global oil prices and attract international attention.

Status of other major oil exporting countries

The broader regional situation remains challenging for other major exporters as well. Iraq continues to face export constraints because much of its crude moves through the Persian Gulf. Kuwait remains heavily dependent on Gulf shipping lanes. Qatar’s LNG exports have encountered logistical complications amid maritime security concerns. The UAE is relatively better positioned because of the Abu Dhabi-Fujairah pipeline, which bypasses Hormuz, although rising insurance and security costs have reduced export efficiency. While these countries continue to export crude, they are unable to fully offset a significant reduction in Saudi export volumes if the disruption persists for an extended period.

Will the World Face an Oil Shortage and Can Other Countries Replace Saudi Supply?

A severe global oil shortage is unlikely in the immediate term, as commercial inventories, strategic petroleum reserves, and alternative suppliers can provide a temporary buffer. However, the suspension of Saudi Arabia’s East-West Pipeline threatens up to 4 million barrels per day of exports, equivalent to nearly 4% of global oil demand, which could significantly tighten market balances if the disruption persists. While countries such as the United States, Canada, Brazil, Guyana, Norway, and Russia can supply additional barrels, fully replacing Saudi crude is difficult because of differences in crude quality, refinery requirements, and limited spare production capacity.

Impact on India

India imports more than 80% of its crude oil requirements, making it highly sensitive to global price fluctuations. Saudi Arabia accounts for roughly 8-10% of India’s crude imports, making the kingdom one of India’s key suppliers. The immediate impact would likely be higher import costs rather than a physical supply shortage, as Indian refiners can diversify purchases toward Russia, Iraq, UAE and the United States. However, sustained prices above $100 would widen India’s current account deficit, increase fuel inflation, pressure the rupee and raise costs across transportation and manufacturing sectors.

Price outlook and chances of a ceasefire

Oil prices are likely to remain highly volatile in the near term. If Saudi Arabia restores pipeline operations within a few weeks and regional security improves, Brent may retreat toward below $90 range. However, if disruptions persist and attacks continue, prices could test $115-$125 or more per barrel, especially if additional export infrastructure is affected. The probability of a ceasefire remains uncertain. Diplomatic efforts are ongoing, but both military tensions and attacks on critical energy infrastructure suggest that markets will continue to price a substantial geopolitical risk premium into crude oil for the foreseeable future.

(The author is Head of Commodity Research, Geojit Investments )

JioBlackRock Mutual Fund has filed a draft document with Sebi for an income plus arbitrage omni FoF, an open-ended fund of funds scheme investing in units of active/passive debt-oriented funds and arbitrage funds.

According to the draft document filed with Sebi, the investment objective of JioBlackRock Income Plus Arbitrage Omni FOF will be to generate income by investing in active/passive debt-oriented funds and arbitrage funds.

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The performance of the fund will be benchmarked against 60% NIFTY Composite Debt Index + 40% Nifty 50 Arbitrage Index (TRI) and will be managed by Anand Shah, Haresh Mehta, Siddharth Deb, Arun Ramachandran.

The scheme shall offer two plans viz. regular plan and direct plan, each with a growth option only. The minimum application amount for lumpsum investment will be Rs 500 and any amount thereafter. The minimum investment amount for monthly SIP will be Rs 500 and in multiples of Re 1 thereafter with minimum six installments.

The fund will invest 95-100% in units of debt oriented schemes of the JioBlackRock Mutual Fund or other than the JioBlackRock Mutual Fund having similar objectives, strategy, asset allocation and other attributes; units of arbitrage scheme of JioBlackRock Mutual Fund or any other arbitrage fund other than JioBlackRock Mutual Fund, as found suitable by the fund manager.
JioBlackRock Income Plus Arbitrage Omni FOF will also invest 0-5% in debt and money market instruments.The fund will be suitable for investors who are seeking income over short to medium term investment horizons and want investment in units of active/passive debt oriented funds and arbitrage funds.

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The principal invested in the fund will be at moderate risk according to the riskometer of the fund whereas the principal invested in its benchmark will be at low to moderate risk according to the riskometer of the benchmark.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of ISNPY, IITSF either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.