Proposed CA Tax On Billionaires Could Drive Some Out Of State

A new measure that would tax California's billionaires is stirring controversy in the state and particularly in Silicon Valley, where innovators continue to get richer while millions are struggling under inflation.

Proponents say the one-time 5 percent wealth tax could raise $100 billion for healthcare for the state's most vulnerable residents. Meanwhile, opponents say it would drive wealth out of the Golden State.

Gov. Gavin Newsom has also warned that the measure could threaten innovation and entrepreneurship. The democratic governor has reportedly voiced opposition to the bill while powerful Democrats like Sen. Bernie Sanders (I-Vt.) has endorsed the wealth tax.

“California politics forces together some of the richest areas of America with some of the poorest, often separated by just a freeway,” Thad Kousser, a political science professor at UC San Diego told the Los Angeles Times earlier this month. "The impulse to force those with extreme wealth to share their riches is only natural, but often runs into the reality of our anti-tax traditions as well as modern concerns about stifling entrepreneurship or driving job creation out of the state.”

If it passes, the measure would tax up to 5 percent on residents and trusts with businesses, art and intellectual property valued at $1 billion or more just one time. Properties are excluded from those assets. It would affect about 200 people in California, according to an estimation from Suzanne Jimenez, the chief of staff for SEIU-UHW — the health care union that is helping to drive the bill.

The tax could be paid in a lump sum in 2027 or spread over five years at a higher total cost. About 90% of the revenue would be directed to health care programs, with the remainder funding food assistance and education initiatives. The tax would apply retroactively to people living or entities operating in California as of Jan. 1, 2026.

While the measure hasn't yet qualified for the November ballot, as it's still in the signature gathering process, it has unleashed chaos among both politicians and the rich.

“It’s a matter of values,” Rep. Ro Khanna wrote on X. “We believe billionaires can pay a modest wealth tax so working-class Californians have the Medicaid.”

The bill is a response to the One Big Beautiful Bill Act, championed by the president and Republicans, which could detriment hospitals, eliminate health care jobs and strip healthcare from millions.

The news comes as more companies move operations out of the state in pursuit of lower taxes and less regulation.

Jessie Powell, co-founder of the Bay Area-based crypto exchange program Kraken, wrote on X earlier this month that the richest in California would leave if the measure passed in November.

“I promise you this will be the final straw,” Powell wrote. “Billionaires will take with them all of their spending, hobbies, philanthropy and jobs.”

Some have preemptively moved out of the state such as Google co-founder Larry Page, PayPal co-founder Peter Thiel, Oracle founder Larry Ellison and venture capitalist David Sacks, the San Francisco Chronicle reported.

“If it’s to plug a deficit, they’re gonna run deficits every year," billionaire Chamath Palihapitiya said on Podcast "All in" recently, the newspaper also reported.

However, not all of the state's wealthiest are threatening to leave. Nvidia CEO Jensen Huang told Bloomberg that he and his company aren't going anywhere.

“We chose to live in Silicon Valley, and whatever taxes they would like to apply, so be it.”