A proposed new tax targeting California's ultra-wealthy has triggered threats of a mass exodus, with some of the state's most prominent billionaires reportedly making plans to pack up and leave. The ballot measure, which seeks to impose a significant levy on fortunes exceeding $1 billion, is being met with fierce resistance from Silicon Valley's elite.
The Tax Proposal Sparking the Backlash
The controversial plan was put forward by the Service Employees International Union-United Healthcare Workers West. It has been cleared for campaign by the state Attorney General’s Office. The union's proposal is straightforward but seismic: it would introduce a five percent tax on every dollar of wealth held by Californians worth more than $1 billion.
If the measure gathers enough signatures to appear on the November ballot and subsequently wins voter approval, it would take effect for anyone residing in the state from 1 January 2026. For context, the tax would mean a one-time payment of $27.5 billion for Google co-founder Larry Page, whose net worth is estimated at $258 billion. Venture capitalist Peter Thiel, with a $27.5 billion fortune, could face a bill of around $1.2 billion.
The union argues the tax is necessary to address a 'growing gap' in healthcare. "At a time when healthcare executives are collecting multimillion-dollar paychecks while patients delay care and frontline workers struggle to make ends meet, it's clear the system is broken," said ultrasound technologist Mayra Casteneda. The proposal also includes a cap on executive pay at hospitals and medical groups of $450,000 per year.
The Billionaires Plotting Their Escape
The reaction from California's wealthiest residents has been swift and decisive. According to reports from The New York Times, an informal coalition of billionaires is actively exploring relocation to avoid the potential tax hit.
Venture capitalist Peter Thiel is among those said to be plotting a departure. Sources indicate he has begun seeking to open an office for his personal investment firm, Thiel Capital, in another state. Similarly, Google co-founder Larry Page, a long-time Palo Alto resident, has privately discussed leaving California before the year's end. Three companies linked to Page have already filed incorporation documents in Florida.
Tech investor Chamath Palihapitiya publicly confirmed he has given "serious consideration" to relocating to Texas if the measure proceeds. "The inevitable outcome will be an exodus of the state's most talented entrepreneurs who can and will choose to build their companies in less regressive states," he warned.
The planning appears widespread. High-net-worth tax advisor David Lesperance revealed that nearly all of his clients are "taking steps as quickly as possible both to sever California residence and to move assets out of the state." Miami real estate agent Brett Harris told The New York Times that five California billionaires had already contacted him to explore moving to Florida to "offset their risk."
Political and Economic Fallout
The proposed tax has created a significant political divide. California Governor Gavin Newsom has criticised the measure as "not pragmatic" and opposes state-level wealth taxes, arguing they incentivise relocation. He has even raised funds for a committee dedicated to opposing the ballot measure, which received a $100,000 donation from venture capitalist Ron Conway.
However, the union's chief of staff, Suzanne Jimenez, defends the focus on billionaires, whom she calls the "most fortunate people in this state." The union estimates the tax could generate up to $100 million from roughly 200 individuals, though state analysts project it could collect "tens of billions of dollars" in one-time payments.
The potential economic consequences are stark. The state's Department of Finance has warned that California could lose hundreds of millions annually in income tax revenue if these high-net-worth individuals depart. Leaving is not simple, however; California's tax agency is known for aggressive revenue collection and scrutinises factors like principal residence, voter registration, and family locations to determine residency.
This debate unfolds against a backdrop of widening income inequality in the United States. Congressional Budget Office data shows the top ten percent of Americans hold 69 percent of the nation's wealth, while the bottom fifty percent share just three percent. The California wealth tax initiative is a direct, and highly contentious, attempt to address that imbalance.
