I recently wrote an open letter to Gov. Jerry Brown regarding his plan to raise taxes on the wealthiest individuals living, working and spending money in California. It was carried on the Huffington Post. In it, I predicted the consequences that would be faced if the governor is successful in his attempt to punish the biggest contributors to our state economy, one of which is an exodus of business owners and taxpayers, such as me, who are already making the biggest contributions and will take their families, businesses and jobs out of the state. But given the urgency of the governor in ramming this tax increase through, I’d like to take a closer look at how the plan to fix Sacramento’s mismanagement of taxpayer funds will affect Los Angeles County.

Let’s start with simple math. I employ 15 people at my company in Los Angeles. Add to that two nannies, our maid, gardeners, pool cleaners, a car detailer and a handful of professional service providers (legal, medical, etc.). This is multiplied when we make purchases at the nearby Starbucks, Vons Pavilions grocery and the Beverly Center shopping mall, or when we entertain or take our families to dinner at Boa Steakhouse, not to mention the hundreds of dollars spent every month to park our cars.

You quickly get the picture of the destructive nature of this tax hike when my business becomes a Nevada corporation – in fact, this tax hike makes the heat of the Nevada desert look like a downright oasis. On a macro level, realize the even distribution of pain this will cause when other businesses and households in the hills of Hollywood, Beverly and across the Westside decide to pick up and leave. 

One area this has already affected is the housing industry. The renovations on my home were put on indefinite hold when the governor unveiled his plan to raise my taxes. Does the governor not know the pivotal role that the housing industry plays in Southern California as the engine of economic growth and tax revenue?

The governor and his partners in the mismanagement of tax funds in the state Assembly might think that this is an easy way to attack captive businesses in the entertainment or defense industries or at the car megadealerships, but these are smart people who will know how to make up the losses – which will result in less revenue for the state and a redistribution of the pain down the food chain that’ll show Sacramento the real meaning of trickle-down economics.

On a business level, this is like BlackBerry trying to raise the price of their handsets to make up for decreased revenue and losses in market share to the iPhone. What a world it would be if all we had to do in business to compensate for a failing product or service were to raise prices to avoid making the necessary improvements or reforms.

Mark my words, when the taxman swings his ax, everybody gets a cut.

Fixing our schools

More money to the politicians in Sacramento will not even begin to fix our schools. In fact, our schools have gotten so bad that the only thing kids are getting from a public education are colds.

Why there isn’t a long-term plan to fix our state and heal this vital city is beyond me and just more of the same – politics as usual.

In my original letter, I pointed out that I love this state. I went into business to create a job for myself with the hopes that I could create financial freedom for myself and my family. I have since created opportunities for the people who work with me while assisting individuals and companies around the United States and the world to improve their own businesses and financial lives.

I am from middle-class America and started each of my businesses with no money and without being a burden to the system. I have never used government funding for any of our projects. During the most recent economic collapse, I didn’t let anyone go despite the brutal financial pounding that my companies experienced. Rather than laying off employees, I cut my pay instead and financed my personal life from savings.

Sacramento has proved itself incapable of increasing taxes and balancing the budget.

As I said in the letter, even if a majority of voters support this proposal, it doesn’t mean it is the right thing to do. When enough people like me move out of this state, which I believe they will, the state will pay the ultimate price with higher unemployment, further erosion of housing prices, less tax revenue and the only beneficiaries will be states like Washington, Nevada, Texas, Tennessee and Florida.

Grant Cardone owns and operates Cardone Training Technologies Inc. in Los Angeles and has written five books, including his latest, “Sell or Be Sold.”