California, like a careless heir who squanders a fortune, keeps menacing its top taxpayers. Unless lawmakers start showing some restraint, the state’s many economic strengths are likely to further erode.

An emblematic example is the recent campaign — orchestrated by a health-care workers union — to levy a supposedly one-time 5% wealth tax on the state’s billionaires. Proponents tout the measure as an “emergency” response to cuts in federal funding of health care, education and food assistance.

Problem is, the proposal would apply retroactively, adopt punitive valuation methods, and potentially force founders to liquidate shares or face bills that actually exceed their net worth. If enacted, it would not only induce billionaires to flee the state and drive down valuations, but likely also create an exodus of startups, investment, jobs and growth — thereby actually worsening the tax burden on remaining residents.

Even if the initiative fails, it has already chased away some of the state’s top entrepreneurs. That’s a self-inflicted fiscal wound when the top 1% of earners pay some 40% of personal income taxes, the state’s main source of revenue growth.

The damage goes deeper. Wealthy Californians already pay the nation’s highest marginal tax rate, but state finances are a mess, with structural annual deficits forecast to grow to an annual $35 billion. According to a recent watchdog report, the state has had to paper over deficits for four consecutive years, even as revenue has risen.

Meanwhile, lawmakers continue to make life harder for businesses. California already imposes more regulations than any other state — some 40% more than runner-up New York — and many of them are costly and misguided. A 2019 law that classified gig workers as employees clobbered industries such as nursing and trucking, raised costs statewide, and eventually led to a voter revolt. A $20 minimum wage for fast-food workers raised consumers’ prices and slashed jobs as employers turned to automation.

The predictable result of such efforts: No other state has a higher unemployment rate and few approach California’s costs of living and doing business. A long list of local success stories, including Charles Schwab Corp., Hewlett Packard Enterprise Co. and Tesla Inc., have moved to states with lower taxes and less red tape. For the sixth straight year, U-Haul rental truck data showed California led the nation in net out-migration.

Gov. Gavin Newsom insists that he’s pursuing a “jobs first” mission and has tried to slash certain regulations and limit frivolous lawsuits against employers. He has also opposed the billionaire tax proposal. Yet the state needs a bolder agenda to retain its competitive edge.

Its first goal should be to stop antagonizing businesses and focus on growth. It needs to restrain new regulations and employment laws — 10 this year alone — and sunset existing ones that don’t meet a cost-benefit test. In an ideal world, it would also strive to limit fines and fees, slash permitting delays, tame its legendary bureaucracy, restrain union power, and otherwise heed the reasonable complaints of the business owners who sustain the state’s economy.

Next, legislators need to face budgetary reality. They should scrap the misguided billionaire’s tax, forgo fiscal gimmicks, and do the hard work of controlling spending and rationalizing the tax code. Thanks largely to powerful unions, the state is creating obligations that can’t realistically be sustained by a dwindling number of rich people.

In the longer term, the state may well require constitutional reform to ease its dysfunctions. For now, the key is to stop making things worse. California still has many enviable advantages, but the opportunities that drew generations of Americans westward are increasingly at risk.

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