October 13, 2025 • 28 mins
In this episode of Lead-Lag Live, I sit down with Ethan Penner — independent candidate for California governor and a trailblazer in U.S. commercial real-estate finance — to break down what he calls the “collapse of competent governance” in California.
From a radical tax overhaul to fixing housing and energy costs, Penner outlines how he’d reverse decades of political decay — and why he believes Gavin Newsom’s policies have left the state weaker, poorer, and more divided.
In this episode:
– Why Penner says there’s “absolutely nothing” worth continuing from Newsom’s tenure
– How a single-tax system could revitalize California’s economy
– The real drivers of the housing and affordability crisis
– How bureaucratic red tape adds $100K+ to every new apartment build
– Why leadership grounded in empathy and business discipline matters now more than ever
Lead-Lag Live brings you inside conversations with the financial thinkers who shape markets. Subscribe for interviews that go deeper than the noise.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_01 (00:00):
And so the way we're going to do that is to initially
introduce um half of theconsumption tax and reduce all
the taxes that we are going toultimately eliminate by half.
And we'll see where we are atthe end of that first year.
I think he's he's he's failedour state in every single level.
(00:21):
He's been, he's yourprototypical um career
politician who literally knowsnothing.
SPEAKER_00 (00:46):
Now, California is bleeding citizens, high taxes,
crushing regulation, and a costof living that just keeps
rising.
Many residents and businessesare leaving for states with
lighter burdens.
This California exodus reflectsa deeper problem.
When the fiscal model falls, theinfrastructure of growth
crumbles.
Into that void, steps EthanPenner, an independent
(01:09):
gubernatorial candidate whoseresume includes pioneering work
in commercial real estate,finance, and in capital markets.
In September, he unveiled aradical tax reform plan
replacing California's patchworkof income sales, excise estate,
and gift taxes with a single 15%consumption tax.
Ethan, thanks so much for beinghere with me.
(01:34):
So let's start uh pretty direct.
Your tax plan is it's bold,replacing virtually every major
state tax with one consumptiontax.
How do you defend it againstaccusations that it favors high
spenders over savers and that itcould have a it could that it
could destabilize state financesif if the revenues fall short?
SPEAKER_01 (01:53):
Well, um those are all great questions, but let me
start with the word bold becauseyou used that in your in your
intro.
And I think that it it is bold,and our state requires bold
initiatives.
We need change.
As you said, uh California isfailing.
We're getting our butts.
(02:14):
All we have to do is go back tothe 19th century.
SPEAKER_00 (02:19):
Not better state.
So what of course alreadymanaged so far in the last few
years.
And we said that raising ratesbehind.
Some nominal rates went up alot.
During that decade is a greatexample.
SPEAKER_01 (02:32):
Intelligent design, which we have as a system in
California for as long as Icould remember.
The answer to your question, ofcourse, is very important
because government, and first ofall, a society that doesn't care
for its most vulnerable citizensis a society that's doomed to
(02:52):
fail.
So a tax plan can't favor thewealthy because they're already
doing very well.
It has to do, a tax plan has toinvigorate an economy and do so
in a manner that doesn't harmbut actually helps citizens who
are trying to make it.
And that's the majority ofCalifornians.
(03:13):
So my tax plan does that.
My tax plan is set up to exciteand attract dreamers and people
who have ambitions for buildingcompanies.
Uh, and that will createabundance in our state.
It will create jobs uh foreverybody, it'll create immense
(03:33):
opportunities, and it will growour tax base, not shrink it.
That will enable us to invest inall the things that we need to
invest in as a state to ensurethat everything's run first
class here, which is not thecase today.
We have a shrinking tax base,and we have a shrinking tax base
because the producer class feelsum kind of unable to fulfill
(03:58):
their dreams and their ambitionsand are moving elsewhere,
particularly to places likeTexas.
Specifically, though, my uh, youknow, consumption taxes have
historically been criticized asbeing something that is um
repressive in the sense that ituh it punishes the people who
are making less money.
(04:19):
And so to specificallycounteract that, my plan
includes what we call apre-bate.
So at the beginning of everyyear, people that are making
less income are going to receivea check from the state
government that would equal apercentage, uh depending upon
(04:42):
where they fall in the kind ofincome category, but uh receive
a check up front that aims tocover for the people at the
lowest end 100% of what thatconsumption tax would uh be for
them.
So they would essentially livetax free, which they're not
living tax-free today.
The people at the lowest end areactually paying some sales tax,
(05:05):
and especially this horriblegasoline tax.
So we'll eliminate that for themand they'll actually be better
off.
And then as we move up the foodchain from the people who are
making, let's say, the lowestlevel of income up towards what
I guess I would call reallymiddle class, there are still
going to be some benefits theyreceive in the form of a check
(05:27):
from the state government tooffset the consumption tax or
part of the consumption tax sothat they're not inadvertently
worse off than they are today.
Our goal is to make sure thatthe people that are in the lower
levels of income that are tryingto make it and working so hard
are better off, not worse off asa result of this tax plan.
SPEAKER_00 (05:48):
Right, Ethan.
And you're talking about uh likeyou said the word bold, I said
the world word bold.
It's a huge shift.
What transitional safeguards areyou going to embed so that local
services, uh, schoolinfrastructure, etc.
SPEAKER_01 (06:01):
don't feel like that.
Of course, so we we musttransition in a gentle way to
ensure that we don't stumble andfall.
And so the way we're gonna dothat is to initially introduce
um half of the consumption taxand reduce all the taxes that we
are gonna ultimately eliminateby half.
(06:22):
And we'll see where we are atthe end of that first year with
regards to collections.
And assuming we're where wethink we'll be, we'll go ahead
and cut it again in half andincrease the consumption tax
again in half.
And by the third year, assumingall is as we expect it to be and
we're meeting our budgetaryneeds amply, we'll by the end of
(06:46):
the third year be able totransition fully to the
consumption tax with the fullelimination of all the taxes
that we're aiming to eliminate.
So it'll be done in a gradualand thoughtful manner to ensure
that we don't stumble and fall.
SPEAKER_00 (07:00):
Okay, Ethan.
And I I want to move on fromtaxation, as I I said in on my
intro, there's quite a fewissues happening uh in the
state.
And and some would argue thatmigration is is driven by
housing costs, regulation,crime, et cetera.
How how do you isolate the taxpolicy's role versus these other
factors?
And how do you prove your plancan reverse uh the people that
(07:21):
are migrating out of some of thepeople?
SPEAKER_01 (07:22):
Well, you know, Melanie, you're a hundred
percent right.
The tax plan is kind of a um aheadline grabber, right?
It's the one that's gonna say,you know, California is open for
business.
California has an intelligentrather than a penalizing tax
plan.
And the tax foundation, as Ithink you probably know, has
(07:44):
already ranked my tax plan thirdin the nation behind only North
Dakota and Wyoming, which are,which are obviously very small
states.
So as far as the large statesgo, we would be the best tax
plan in the country from ourcurrent position of 48th in the
nation.
So that headline grabber isgoing to be the magnet that I
(08:07):
think causes people to payattention and causes companies
to return and grow in the stateof California.
But you're right when you saythat's only one part of what
needs to be done in order tocorrect all the things that need
to be corrected in our state.
Affordability, and it's not justhousing, but it's housing.
(08:28):
Let's start with housing.
Housing affordability is amajor, major problem.
And I would say the primarycause of that problem, perhaps
almost the only cause of thatproblem, is a supply-demand
imbalance.
And our supply-demand imbalanceis well kind of covered in a
white paper that was done justthis past year by the Rand
(08:51):
Corporation, which pointed outthat it costs more than$100,000
extra to build an apartment unitin the state of California than,
for example, in the neighboringstate of Arizona.
So we're creating crazybarriers.
And most of that$100,000 premiumhas to do with red tape and
(09:12):
bureaucracy, waiting time,filing costs, permitting costs,
all that kind of stuff, legalcosts associated with that.
It takes two to four years toget approvals to build an
apartment.
In the state of Texas, wherethey have um by right um uh
(09:32):
statues, it takes two to fourweeks to get the same approval.
That is a repellent fordevelopers, and they're and as a
result, we don't have enoughsupply.
And it's a simple supply-demandproblem.
So we will fix that in the stateof California by streamlining
the approval processes withoutsacrificing any of the
(09:54):
environmental protections thatwe need to have in California
and that every state needs tohave, but perhaps more so in
California because of ourbeautiful environment.
But we can do that withoutcreating this crazy bureaucratic
red tape process that adds somuch cost and repels developers.
So that would be how we fixhousing.
(10:15):
There's other issues onaffordability, primarily around
energy costs.
Gasoline costs are way higherthan the rest of the country.
And home utility costs are wayhigher.
These things are fairly easy tofix, and we will fix them.
SPEAKER_00 (10:31):
Yeah, and I wanted to uh dive a little bit deeper
into the construction.
I know that red tape isdefinitely uh causing issues,
but also, you know, in relationto immigration, some people
would say that immigration andlabel aren't really central in
your platform or they're they'resort of mentioned in passing.
Given how vital immigrant laboris to these key industries,
(10:51):
construction as one, caregiving,agriculture, et cetera.
What's your realistic plan forimmigration enforcement that
doesn't throttle the economy?
SPEAKER_01 (10:59):
Oh, well, first of all, I I would like to decouple
those two kind of uh what youwhat you've coupled, I think
deserves to be decoupled.
I don't view immigration as anissue that is economic.
I view uh immigration right nowuh as an issue that is humane
(11:20):
and ethical.
So there isn't ultimately adiscussion about economics, but
not at this moment.
So let me first start by sayingthe neighboring states like
Arizona, while they have umimmigrants, they're still
developing properties at$110,000per unit cheaper than we are.
Uh, and it has nothing to dowith immigration policy.
(11:42):
It's just that's purebureaucratic red tape.
And and the RAND corporation'swhite paper illustrates that
quite well.
As far as immigration goes,you're right.
I don't spend a whole lot oftime talking about immigration
uh as my platform, because tome, it comes down to something
that's fundamental.
So fundamentally, we can't livein a society where we mistreat
(12:07):
people, any people.
It just doesn't work, right?
And so if we have people in ourmidst who are living in our
society, they all deserve,because every human being
deserves to be treated withdignity.
There's no rounding up people.
That's just patently wrong.
Now, there are immigrationpolicies, and I'm a big law and
(12:31):
order person.
And so we can have a discussion,a real discussion, about law and
order.
But I think that we also have tobalance kind of what we're doing
with regards to immigrants inthe state of California and
elsewhere, with the fact that inthe state of California, I know
for a fact that there are atremendous amount of immigrants
(12:55):
who have lived here undocumentedfor many, many years.
And in some cases, numerousdecades.
They've had children here,they've raised children here,
uh, their children are Americancitizens and paying taxes and in
some cases serving our countryin the military.
And for us to now say to thesepeople, get out, I mean, I
(13:18):
actually don't believe that'sthe right thing to do.
And um, you know, so so I'm I Ihave uh I have very strong
beliefs about uh what is rightand and doing what's right.
Teddy Roosevelt, who's probablymy number one political role
model, uh, said there's a rightand there's a wrong, and I
(13:38):
always want to be on the side ofright.
And I would say I'm in the samecamp on that.
SPEAKER_00 (13:43):
Yeah, I'm I'm really glad.
I mean, when we first met inHuntington Beach uh in
September, one of the thingsthat really stood out to me
about you was how caring youwere about people, you know, and
that then that's something thata lot of people might not um
pair always with someone who hassuch a strong uh finance
investment background.
SPEAKER_01 (14:02):
You know, that's by the way, I have to I have to
attack that because that's justso terrible.
We we do tend to um characterizepeople, you know, judge the book
by the cover, and then start togroup people.
And yeah, I mean, I I I'm a notonly am I a very nice person,
you know, I'm a very kindperson.
My wife is Latina.
(14:22):
She literally was born andraised in Venezuela and Chile,
and she moved here as animmigrant in 1992, uh, and
speaks with quite a heavySpanish accent.
So Spanish is her firstlanguage.
My family's all fluent inSpanish.
I have a Latino family,actually, because of the mother
(14:43):
of the family is Latina.
And so I am extremely empatheticto um to everybody, right?
I mean, I I've I have twoadopted children, just to throw
that out there, one of whom isborn in Africa.
Um, so, and one of whom is bornin South America.
So I I have a very broad uh kindof experience within my own
(15:07):
family.
And um and uh and as a result, Ithink I've created a nice family
of empathy and caring.
SPEAKER_00 (15:14):
Yeah, so that leads me to perfectly to my next
question with this experiencethat you've just talked about,
this the social experience, yourfamily experience, um, your your
your background uh in yourethnic background and uh and
that of your family, but thenalso your strong background in
finance and investment, as I hadjust mentioned.
What government problem do youthink believe, or do you believe
(15:35):
that your background equips youto fix better than a traditional
uh politician?
And what's one tangible resultpeople will see within uh the
first six months?
SPEAKER_01 (15:45):
Well, I I don't think what you call traditional
politician, and I will callcareer politician.
I don't think that they're wellequipped to actually serve our
country in any way, our state,our cities, our country.
I think this is a falsenarrative.
Uh, unfortunately, um, you know,when our founding fathers uh
(16:06):
first kind of fought up ourcountry, they believed in
citizen government, right?
That citizens with would bringtheir real life experience to
government and government wouldbenefit from that.
They really did not imagine acountry run by professional
politicians who over time wouldlose all connection to and
(16:28):
understanding of and ability tobe empathetic with the average
citizen.
And so to me, the domainexpertise required to run a
country, where because we'reCalifornia is a country.
It's a four plus trillion dollareconomy.
It's mostly financial, it'smostly economical, um, it's
(16:50):
mostly systems that need to workand function to service our
society.
This is tremendous domainexpertise that is far beyond the
scope of most everybody, really.
And I think that I do bring kindof a unique background with my
kind of experience in business,my business, my experience
(17:12):
having transformed an entiresystem, the real estate finance
system in America, uh, and myexperience as a professor.
I've been teaching at businessschool.
So I, you know, I think I bringa unique package of skills that
are really relevant to reworkthe systems that are desperately
needed to be reworked in ourstate, taxes being the obvious
(17:34):
one, but I'll throw a couple ofcouple of other ones out there.
Property insurance systems.
You know, if you don't haveample property insurance, which
we don't have in the wake of ourfire problems, if you can't get
property insurance, you can'tget a mortgage on your house.
And if you can't get a mortgageon your house, or a buyer can't
(17:55):
get a mortgage when he wants tobuy your house, your house is
worth a lot less than itotherwise would be because
someone has to buy it without amortgage.
And there are just far fewerbuyers that can afford a house
without a mortgage.
And so we are facingcatastrophic economic problems
if we don't solve for thisproperty um insurance problem,
(18:18):
which given my background, I'mperfectly suited to handle.
But I can go on and on.
I mean, energy is anotherexample, and just understanding
the intricacies of energy andhow energy is priced in our
state, and the lack of a freemarket aspect to how energy is
priced has created thisartificially inflated energy
(18:41):
cost that is punishing ourcitizens and particularly our
working class citizens.
So all of that will be fixed bysomebody like me who actually
brings an awareness and anunderstanding of how to actually
repair these broken systems.
SPEAKER_00 (18:56):
Yeah.
And I mean, we so we've spent alot of time talking about what
needs to change.
I I want to ask you sort of adifferent question.
Um if you and you'll befollowing uh Gavin Gavin Newsom
into the governor's house, butwhat parts of his tenor do you
believe actually meritcontinuation?
SPEAKER_01 (19:11):
Absolutely none.
I think he's he's he's failedour state in every single level.
He's been, he's yourprototypical um career
politician who literally knowsnothing.
He's a wonderful actor.
He should have been an actor inthe movies or in TV.
He'd have been he's handsome,he's incredible at reading
(19:35):
scripts, memorized lines, but heliterally is an empty vessel.
He knows nothing.
And our state, the results inour state reflect that across
the board.
You know, there these are notwhat I say seems hyperbolic, but
they're actually based onobjective observations.
So imagine that we have a$4.2trillion economy, which we do in
(19:59):
California, and we hear him bragabout that, that we're the
fourth largest economy, if wewere a country in the world.
How would that be?
How is it possible that in astate that has that economic
heft, we also are the state withthe most people and the highest
percentage unemployed.
(20:20):
We are the state with the mostpeople and highest percentage
living at or near the povertyline.
We are the state with thehighest percentage and most
people that are homeless.
We are the state with thehighest percentage and most
young adults living at home withtheir parents, double, by the
way, the national average.
The only answer to any of thosequestions, the only thing that
(20:41):
speaks to kind of that conundrumis the most incompetent
intermediation process in thehistory of government, and
that's our state government.
So nothing.
I would, I would actually, Iwould say everything needs to be
redone.
He's the complete failure.
SPEAKER_00 (20:58):
Are you then siding with Trump?
Trump has lots of criticiz uhcriticized of newsome.
SPEAKER_01 (21:03):
Well, well, I I I'm running as a true independent,
Melanie, and I'm not um anadvocate for either of the
parties.
Now, of course, I'm running forCalifornia government, and the
California governorship and theCalifornia statewide uh offices
have been controlled by theDemocrat Party.
(21:25):
So the record that I need to fixis clearly a Democrat record.
And it might seem like I'm avery partisan person favoring
the Republican Party, whichseems weird as an independent.
But the reality is theRepublican Party's done nothing
in the state of California.
So there's nothing really tocriticize about their, you know,
(21:46):
their input into state affairs.
They've been essentiallyuninvolved.
So uh so perhaps I might I wantto make sure that I don't come
off as just this kind of likesneaky um MAGA Republican
criticizing Democrats butrunning as an independent.
I I have there's nothing tocriticize about the Republican
record.
They've done nothing for 20years.
(22:06):
They haven't been involved.
SPEAKER_00 (22:08):
Yeah, Ethan, and I I think that's fair.
I I want to ask just before wewrap up about uh the debt
situation in in California.
A lot of our viewers areinvolved in the stock market,
it's advisors, it's um traders,uh, funds, equity, uh people
involved in equities.
What are you going to do if theU.S.
(22:29):
or if California heads into arecession?
SPEAKER_01 (22:31):
I think the recessions, Melanie, are always
uneven.
Always uneven.
Meaning they affect differentplaces and different people uh
differently.
California is a magical place.
California should be immune to alarge extent to a recession.
(22:52):
I I would the question you ask,if you were to ask me, um, and I
was aspiring to be the governorof another state, and there are
many states that I think arevery, very vulnerable.
Illinois, for, for example, veryvulnerable.
New York, New Jersey, um,Oregon, Seattle, the state the
country's filled with stateswhere the answer to your
(23:16):
question would be very, verychallenging.
Very challenging.
California happens to be one ofthe very few examples uh that
are kind of exceptions to thatquestion.
I think a well-run Californiashould thrive regardless of the
national economy, and in spiteof perhaps problems and
(23:36):
headwinds that we face.
So I'm very bullish onCalifornia if I were to win, if
I'm able to make the changesthat need to be made.
Otherwise, I have to tell you,I'm extremely bearish because
the statistics that I justmentioned are embarrassing,
right?
The state of California arguablythe should be the most um
(23:57):
powerful state, the mostsuccessful state.
We're dead last in all of thesethings.
Dead last, okay?
And so if I don't win, and thealternative is probably somebody
who's going to be very similarto our current governor,
perpetuate the trends and theand the um policies that he's
got in place, and maybe even beworse, uh, I would be very
(24:20):
nervous.
So this is an inflection pointfor the state.
And as an investor, I would bewatching this election very,
very carefully.
SPEAKER_00 (24:27):
So to wrap up, where should people be going to find
out more about you?
What's your plan heading in uhto the end of the year?
What's on the horizon?
SPEAKER_01 (24:36):
So we have a uh website, pennerforgovernor.com.
And I would say uh I'm a veryunique candidate, and I think
your listeners by now willprobably have figured that out.
I actually have something tosay.
I'm not afraid to say it oranswer any question, come at me.
And in the same vein, ourwebsite already has four policy
(24:58):
papers up.
We're eight and a half monthsaway from the primary.
There's not another candidatethat even has a policy that they
could articulate.
So we already have four policypapers up.
We're gonna end up with aboutfour or five or six more policy
papers up over the next month orso.
Uh, and we're gonna be a veryuniquely transparent campaign
(25:19):
where so when I get electedgovernor, the legislators will
know that the people voted notjust for me as governor, but for
these policy changes becausethey're gonna be hungry for the
change that we're gonna bring.
So uh so that's what I would do.
I'd go to our our our um ourwebsite uh and see what we're
doing and and sign up becausethis is a movement of the people
(25:42):
for the people.
SPEAKER_00 (25:43):
Ethan, I I want to thank you for doing this, for uh
coming on lead leg live.
And I would love to have youback uh into the end of the year
or in into next year.
SPEAKER_01 (25:52):
Uh anytime.
I I I enjoy talking to you, anduh I would love to join you
anytime you'd have me.
Thank you.
SPEAKER_00 (25:59):
And also thanks to everyone for watching.
Be sure to like, share, andsubscribe for more episodes of
Lead Leg Live.
See you next time.
And so the way we're going to do that is to initially
introduce um half of theconsumption tax and reduce all
the taxes that we are going toultimately eliminate by half.
And we'll see where we are atthe end of that first year.
I think he's he's he's failedour state in every single level.
(00:21):
He's been, he's yourprototypical um career
politician who literally knowsnothing.
SPEAKER_00 (00:46):
Now, California is bleeding citizens, high taxes,
crushing regulation, and a costof living that just keeps
rising.
Many residents and businessesare leaving for states with
lighter burdens.
This California exodus reflectsa deeper problem.
When the fiscal model falls, theinfrastructure of growth
crumbles.
Into that void, steps EthanPenner, an independent
(01:09):
gubernatorial candidate whoseresume includes pioneering work
in commercial real estate,finance, and in capital markets.
In September, he unveiled aradical tax reform plan
replacing California's patchworkof income sales, excise estate,
and gift taxes with a single 15%consumption tax.
Ethan, thanks so much for beinghere with me.
(01:34):
So let's start uh pretty direct.
Your tax plan is it's bold,replacing virtually every major
state tax with one consumptiontax.
How do you defend it againstaccusations that it favors high
spenders over savers and that itcould have a it could that it
could destabilize state financesif if the revenues fall short?
SPEAKER_01 (01:53):
Well, um those are all great questions, but let me
start with the word bold becauseyou used that in your in your
intro.
And I think that it it is bold,and our state requires bold
initiatives.
We need change.
As you said, uh California isfailing.
We're getting our butts.
(02:14):
All we have to do is go back tothe 19th century.
SPEAKER_00 (02:19):
Not better state.
So what of course alreadymanaged so far in the last few
years.
And we said that raising ratesbehind.
Some nominal rates went up alot.
During that decade is a greatexample.
SPEAKER_01 (02:32):
Intelligent design, which we have as a system in
California for as long as Icould remember.
The answer to your question, ofcourse, is very important
because government, and first ofall, a society that doesn't care
for its most vulnerable citizensis a society that's doomed to
(02:52):
fail.
So a tax plan can't favor thewealthy because they're already
doing very well.
It has to do, a tax plan has toinvigorate an economy and do so
in a manner that doesn't harmbut actually helps citizens who
are trying to make it.
And that's the majority ofCalifornians.
(03:13):
So my tax plan does that.
My tax plan is set up to exciteand attract dreamers and people
who have ambitions for buildingcompanies.
Uh, and that will createabundance in our state.
It will create jobs uh foreverybody, it'll create immense
(03:33):
opportunities, and it will growour tax base, not shrink it.
That will enable us to invest inall the things that we need to
invest in as a state to ensurethat everything's run first
class here, which is not thecase today.
We have a shrinking tax base,and we have a shrinking tax base
because the producer class feelsum kind of unable to fulfill
(03:58):
their dreams and their ambitionsand are moving elsewhere,
particularly to places likeTexas.
Specifically, though, my uh, youknow, consumption taxes have
historically been criticized asbeing something that is um
repressive in the sense that ituh it punishes the people who
are making less money.
(04:19):
And so to specificallycounteract that, my plan
includes what we call apre-bate.
So at the beginning of everyyear, people that are making
less income are going to receivea check from the state
government that would equal apercentage, uh depending upon
(04:42):
where they fall in the kind ofincome category, but uh receive
a check up front that aims tocover for the people at the
lowest end 100% of what thatconsumption tax would uh be for
them.
So they would essentially livetax free, which they're not
living tax-free today.
The people at the lowest end areactually paying some sales tax,
(05:05):
and especially this horriblegasoline tax.
So we'll eliminate that for themand they'll actually be better
off.
And then as we move up the foodchain from the people who are
making, let's say, the lowestlevel of income up towards what
I guess I would call reallymiddle class, there are still
going to be some benefits theyreceive in the form of a check
(05:27):
from the state government tooffset the consumption tax or
part of the consumption tax sothat they're not inadvertently
worse off than they are today.
Our goal is to make sure thatthe people that are in the lower
levels of income that are tryingto make it and working so hard
are better off, not worse off asa result of this tax plan.
SPEAKER_00 (05:48):
Right, Ethan.
And you're talking about uh likeyou said the word bold, I said
the world word bold.
It's a huge shift.
What transitional safeguards areyou going to embed so that local
services, uh, schoolinfrastructure, etc.
SPEAKER_01 (06:01):
don't feel like that.
Of course, so we we musttransition in a gentle way to
ensure that we don't stumble andfall.
And so the way we're gonna dothat is to initially introduce
um half of the consumption taxand reduce all the taxes that we
are gonna ultimately eliminateby half.
(06:22):
And we'll see where we are atthe end of that first year with
regards to collections.
And assuming we're where wethink we'll be, we'll go ahead
and cut it again in half andincrease the consumption tax
again in half.
And by the third year, assumingall is as we expect it to be and
we're meeting our budgetaryneeds amply, we'll by the end of
(06:46):
the third year be able totransition fully to the
consumption tax with the fullelimination of all the taxes
that we're aiming to eliminate.
So it'll be done in a gradualand thoughtful manner to ensure
that we don't stumble and fall.
SPEAKER_00 (07:00):
Okay, Ethan.
And I I want to move on fromtaxation, as I I said in on my
intro, there's quite a fewissues happening uh in the
state.
And and some would argue thatmigration is is driven by
housing costs, regulation,crime, et cetera.
How how do you isolate the taxpolicy's role versus these other
factors?
And how do you prove your plancan reverse uh the people that
(07:21):
are migrating out of some of thepeople?
SPEAKER_01 (07:22):
Well, you know, Melanie, you're a hundred
percent right.
The tax plan is kind of a um aheadline grabber, right?
It's the one that's gonna say,you know, California is open for
business.
California has an intelligentrather than a penalizing tax
plan.
And the tax foundation, as Ithink you probably know, has
(07:44):
already ranked my tax plan thirdin the nation behind only North
Dakota and Wyoming, which are,which are obviously very small
states.
So as far as the large statesgo, we would be the best tax
plan in the country from ourcurrent position of 48th in the
nation.
So that headline grabber isgoing to be the magnet that I
(08:07):
think causes people to payattention and causes companies
to return and grow in the stateof California.
But you're right when you saythat's only one part of what
needs to be done in order tocorrect all the things that need
to be corrected in our state.
Affordability, and it's not justhousing, but it's housing.
(08:28):
Let's start with housing.
Housing affordability is amajor, major problem.
And I would say the primarycause of that problem, perhaps
almost the only cause of thatproblem, is a supply-demand
imbalance.
And our supply-demand imbalanceis well kind of covered in a
white paper that was done justthis past year by the Rand
(08:51):
Corporation, which pointed outthat it costs more than$100,000
extra to build an apartment unitin the state of California than,
for example, in the neighboringstate of Arizona.
So we're creating crazybarriers.
And most of that$100,000 premiumhas to do with red tape and
(09:12):
bureaucracy, waiting time,filing costs, permitting costs,
all that kind of stuff, legalcosts associated with that.
It takes two to four years toget approvals to build an
apartment.
In the state of Texas, wherethey have um by right um uh
(09:32):
statues, it takes two to fourweeks to get the same approval.
That is a repellent fordevelopers, and they're and as a
result, we don't have enoughsupply.
And it's a simple supply-demandproblem.
So we will fix that in the stateof California by streamlining
the approval processes withoutsacrificing any of the
(09:54):
environmental protections thatwe need to have in California
and that every state needs tohave, but perhaps more so in
California because of ourbeautiful environment.
But we can do that withoutcreating this crazy bureaucratic
red tape process that adds somuch cost and repels developers.
So that would be how we fixhousing.
(10:15):
There's other issues onaffordability, primarily around
energy costs.
Gasoline costs are way higherthan the rest of the country.
And home utility costs are wayhigher.
These things are fairly easy tofix, and we will fix them.
SPEAKER_00 (10:31):
Yeah, and I wanted to uh dive a little bit deeper
into the construction.
I know that red tape isdefinitely uh causing issues,
but also, you know, in relationto immigration, some people
would say that immigration andlabel aren't really central in
your platform or they're they'resort of mentioned in passing.
Given how vital immigrant laboris to these key industries,
(10:51):
construction as one, caregiving,agriculture, et cetera.
What's your realistic plan forimmigration enforcement that
doesn't throttle the economy?
SPEAKER_01 (10:59):
Oh, well, first of all, I I would like to decouple
those two kind of uh what youwhat you've coupled, I think
deserves to be decoupled.
I don't view immigration as anissue that is economic.
I view uh immigration right nowuh as an issue that is humane
(11:20):
and ethical.
So there isn't ultimately adiscussion about economics, but
not at this moment.
So let me first start by sayingthe neighboring states like
Arizona, while they have umimmigrants, they're still
developing properties at$110,000per unit cheaper than we are.
Uh, and it has nothing to dowith immigration policy.
(11:42):
It's just that's purebureaucratic red tape.
And and the RAND corporation'swhite paper illustrates that
quite well.
As far as immigration goes,you're right.
I don't spend a whole lot oftime talking about immigration
uh as my platform, because tome, it comes down to something
that's fundamental.
So fundamentally, we can't livein a society where we mistreat
(12:07):
people, any people.
It just doesn't work, right?
And so if we have people in ourmidst who are living in our
society, they all deserve,because every human being
deserves to be treated withdignity.
There's no rounding up people.
That's just patently wrong.
Now, there are immigrationpolicies, and I'm a big law and
(12:31):
order person.
And so we can have a discussion,a real discussion, about law and
order.
But I think that we also have tobalance kind of what we're doing
with regards to immigrants inthe state of California and
elsewhere, with the fact that inthe state of California, I know
for a fact that there are atremendous amount of immigrants
(12:55):
who have lived here undocumentedfor many, many years.
And in some cases, numerousdecades.
They've had children here,they've raised children here,
uh, their children are Americancitizens and paying taxes and in
some cases serving our countryin the military.
And for us to now say to thesepeople, get out, I mean, I
(13:18):
actually don't believe that'sthe right thing to do.
And um, you know, so so I'm I Ihave uh I have very strong
beliefs about uh what is rightand and doing what's right.
Teddy Roosevelt, who's probablymy number one political role
model, uh, said there's a rightand there's a wrong, and I
(13:38):
always want to be on the side ofright.
And I would say I'm in the samecamp on that.
SPEAKER_00 (13:43):
Yeah, I'm I'm really glad.
I mean, when we first met inHuntington Beach uh in
September, one of the thingsthat really stood out to me
about you was how caring youwere about people, you know, and
that then that's something thata lot of people might not um
pair always with someone who hassuch a strong uh finance
investment background.
SPEAKER_01 (14:02):
You know, that's by the way, I have to I have to
attack that because that's justso terrible.
We we do tend to um characterizepeople, you know, judge the book
by the cover, and then start togroup people.
And yeah, I mean, I I I'm a notonly am I a very nice person,
you know, I'm a very kindperson.
My wife is Latina.
(14:22):
She literally was born andraised in Venezuela and Chile,
and she moved here as animmigrant in 1992, uh, and
speaks with quite a heavySpanish accent.
So Spanish is her firstlanguage.
My family's all fluent inSpanish.
I have a Latino family,actually, because of the mother
(14:43):
of the family is Latina.
And so I am extremely empatheticto um to everybody, right?
I mean, I I've I have twoadopted children, just to throw
that out there, one of whom isborn in Africa.
Um, so, and one of whom is bornin South America.
So I I have a very broad uh kindof experience within my own
(15:07):
family.
And um and uh and as a result, Ithink I've created a nice family
of empathy and caring.
SPEAKER_00 (15:14):
Yeah, so that leads me to perfectly to my next
question with this experiencethat you've just talked about,
this the social experience, yourfamily experience, um, your your
your background uh in yourethnic background and uh and
that of your family, but thenalso your strong background in
finance and investment, as I hadjust mentioned.
What government problem do youthink believe, or do you believe
(15:35):
that your background equips youto fix better than a traditional
uh politician?
And what's one tangible resultpeople will see within uh the
first six months?
SPEAKER_01 (15:45):
Well, I I don't think what you call traditional
politician, and I will callcareer politician.
I don't think that they're wellequipped to actually serve our
country in any way, our state,our cities, our country.
I think this is a falsenarrative.
Uh, unfortunately, um, you know,when our founding fathers uh
(16:06):
first kind of fought up ourcountry, they believed in
citizen government, right?
That citizens with would bringtheir real life experience to
government and government wouldbenefit from that.
They really did not imagine acountry run by professional
politicians who over time wouldlose all connection to and
(16:28):
understanding of and ability tobe empathetic with the average
citizen.
And so to me, the domainexpertise required to run a
country, where because we'reCalifornia is a country.
It's a four plus trillion dollareconomy.
It's mostly financial, it'smostly economical, um, it's
(16:50):
mostly systems that need to workand function to service our
society.
This is tremendous domainexpertise that is far beyond the
scope of most everybody, really.
And I think that I do bring kindof a unique background with my
kind of experience in business,my business, my experience
(17:12):
having transformed an entiresystem, the real estate finance
system in America, uh, and myexperience as a professor.
I've been teaching at businessschool.
So I, you know, I think I bringa unique package of skills that
are really relevant to reworkthe systems that are desperately
needed to be reworked in ourstate, taxes being the obvious
(17:34):
one, but I'll throw a couple ofcouple of other ones out there.
Property insurance systems.
You know, if you don't haveample property insurance, which
we don't have in the wake of ourfire problems, if you can't get
property insurance, you can'tget a mortgage on your house.
And if you can't get a mortgageon your house, or a buyer can't
(17:55):
get a mortgage when he wants tobuy your house, your house is
worth a lot less than itotherwise would be because
someone has to buy it without amortgage.
And there are just far fewerbuyers that can afford a house
without a mortgage.
And so we are facingcatastrophic economic problems
if we don't solve for thisproperty um insurance problem,
(18:18):
which given my background, I'mperfectly suited to handle.
But I can go on and on.
I mean, energy is anotherexample, and just understanding
the intricacies of energy andhow energy is priced in our
state, and the lack of a freemarket aspect to how energy is
priced has created thisartificially inflated energy
(18:41):
cost that is punishing ourcitizens and particularly our
working class citizens.
So all of that will be fixed bysomebody like me who actually
brings an awareness and anunderstanding of how to actually
repair these broken systems.
SPEAKER_00 (18:56):
Yeah.
And I mean, we so we've spent alot of time talking about what
needs to change.
I I want to ask you sort of adifferent question.
Um if you and you'll befollowing uh Gavin Gavin Newsom
into the governor's house, butwhat parts of his tenor do you
believe actually meritcontinuation?
SPEAKER_01 (19:11):
Absolutely none.
I think he's he's he's failedour state in every single level.
He's been, he's yourprototypical um career
politician who literally knowsnothing.
He's a wonderful actor.
He should have been an actor inthe movies or in TV.
He'd have been he's handsome,he's incredible at reading
(19:35):
scripts, memorized lines, but heliterally is an empty vessel.
He knows nothing.
And our state, the results inour state reflect that across
the board.
You know, there these are notwhat I say seems hyperbolic, but
they're actually based onobjective observations.
So imagine that we have a$4.2trillion economy, which we do in
(19:59):
California, and we hear him bragabout that, that we're the
fourth largest economy, if wewere a country in the world.
How would that be?
How is it possible that in astate that has that economic
heft, we also are the state withthe most people and the highest
percentage unemployed.
(20:20):
We are the state with the mostpeople and highest percentage
living at or near the povertyline.
We are the state with thehighest percentage and most
people that are homeless.
We are the state with thehighest percentage and most
young adults living at home withtheir parents, double, by the
way, the national average.
The only answer to any of thosequestions, the only thing that
(20:41):
speaks to kind of that conundrumis the most incompetent
intermediation process in thehistory of government, and
that's our state government.
So nothing.
I would, I would actually, Iwould say everything needs to be
redone.
He's the complete failure.
SPEAKER_00 (20:58):
Are you then siding with Trump?
Trump has lots of criticiz uhcriticized of newsome.
SPEAKER_01 (21:03):
Well, well, I I I'm running as a true independent,
Melanie, and I'm not um anadvocate for either of the
parties.
Now, of course, I'm running forCalifornia government, and the
California governorship and theCalifornia statewide uh offices
have been controlled by theDemocrat Party.
(21:25):
So the record that I need to fixis clearly a Democrat record.
And it might seem like I'm avery partisan person favoring
the Republican Party, whichseems weird as an independent.
But the reality is theRepublican Party's done nothing
in the state of California.
So there's nothing really tocriticize about their, you know,
(21:46):
their input into state affairs.
They've been essentiallyuninvolved.
So uh so perhaps I might I wantto make sure that I don't come
off as just this kind of likesneaky um MAGA Republican
criticizing Democrats butrunning as an independent.
I I have there's nothing tocriticize about the Republican
record.
They've done nothing for 20years.
(22:06):
They haven't been involved.
SPEAKER_00 (22:08):
Yeah, Ethan, and I I think that's fair.
I I want to ask just before wewrap up about uh the debt
situation in in California.
A lot of our viewers areinvolved in the stock market,
it's advisors, it's um traders,uh, funds, equity, uh people
involved in equities.
What are you going to do if theU.S.
(22:29):
or if California heads into arecession?
SPEAKER_01 (22:31):
I think the recessions, Melanie, are always
uneven.
Always uneven.
Meaning they affect differentplaces and different people uh
differently.
California is a magical place.
California should be immune to alarge extent to a recession.
(22:52):
I I would the question you ask,if you were to ask me, um, and I
was aspiring to be the governorof another state, and there are
many states that I think arevery, very vulnerable.
Illinois, for, for example, veryvulnerable.
New York, New Jersey, um,Oregon, Seattle, the state the
country's filled with stateswhere the answer to your
(23:16):
question would be very, verychallenging.
Very challenging.
California happens to be one ofthe very few examples uh that
are kind of exceptions to thatquestion.
I think a well-run Californiashould thrive regardless of the
national economy, and in spiteof perhaps problems and
(23:36):
headwinds that we face.
So I'm very bullish onCalifornia if I were to win, if
I'm able to make the changesthat need to be made.
Otherwise, I have to tell you,I'm extremely bearish because
the statistics that I justmentioned are embarrassing,
right?
The state of California arguablythe should be the most um
(23:57):
powerful state, the mostsuccessful state.
We're dead last in all of thesethings.
Dead last, okay?
And so if I don't win, and thealternative is probably somebody
who's going to be very similarto our current governor,
perpetuate the trends and theand the um policies that he's
got in place, and maybe even beworse, uh, I would be very
(24:20):
nervous.
So this is an inflection pointfor the state.
And as an investor, I would bewatching this election very,
very carefully.
SPEAKER_00 (24:27):
So to wrap up, where should people be going to find
out more about you?
What's your plan heading in uhto the end of the year?
What's on the horizon?
SPEAKER_01 (24:36):
So we have a uh website, pennerforgovernor.com.
And I would say uh I'm a veryunique candidate, and I think
your listeners by now willprobably have figured that out.
I actually have something tosay.
I'm not afraid to say it oranswer any question, come at me.
And in the same vein, ourwebsite already has four policy
(24:58):
papers up.
We're eight and a half monthsaway from the primary.
There's not another candidatethat even has a policy that they
could articulate.
So we already have four policypapers up.
We're gonna end up with aboutfour or five or six more policy
papers up over the next month orso.
Uh, and we're gonna be a veryuniquely transparent campaign
(25:19):
where so when I get electedgovernor, the legislators will
know that the people voted notjust for me as governor, but for
these policy changes becausethey're gonna be hungry for the
change that we're gonna bring.
So uh so that's what I would do.
I'd go to our our our um ourwebsite uh and see what we're
doing and and sign up becausethis is a movement of the people
(25:42):
for the people.
SPEAKER_00 (25:43):
Ethan, I I want to thank you for doing this, for uh
coming on lead leg live.
And I would love to have youback uh into the end of the year
or in into next year.
SPEAKER_01 (25:52):
Uh anytime.
I I I enjoy talking to you, anduh I would love to join you
anytime you'd have me.
Thank you.
SPEAKER_00 (25:59):
And also thanks to everyone for watching.
Be sure to like, share, andsubscribe for more episodes of
Lead Leg Live.
See you next time.
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