Dem
47
GOP
53
The Service Employees International Union-United Healthcare Workers West proposed a one-time 5% tax on anyone who lived in California on Jan. 1, 2026, and had net assets of $1 billion or more. The group proceeded to collect signatures to get it on the November ballot. California Secretary of State Shirley Weber has now announced that the ballot measure has reached the required 875,000 valid signatures and has thus qualified for the ballot. Gavin Newsom opposes the measure (most likely because he is hoping billionaires will contribute to his 2028 presidential campaign). It is expected to raised $100 billion in revenue.
Since the measure taxes billionaires who lived in the state on Jan. 1, 2026, billionaires can't escape the tax by moving to another state now. So they are collectively working on their own measures to counteract the measure. One would ban retroactive taxes. Google billionaire Sergey Brin and his buddies have pooled over $100 million to fight the tax. If two contradictory measures pass, the one with the most votes wins. Current polling shows that 54% of Californians are in favor of the tax.
Some politicians, including Sen. Elizabeth Warren (D-MA), want to implement annual wealth taxes, the way a number of European countries do. These are much lower than 5% but they cut in at lower amounts than $1 billion, so they hit moderately well-off people, not just billionaires. A federal wealth tax would probably not pass constitutional muster, but states are free to tax anything they want. Opponents of the annual wealth taxes claim that billionaires would just flee to Florida or Texas or some other low-tax or no-tax state.
However, experts in tax flight say that this is often just idle talk. Although billionaires dearly love their money, state laws could require them to really move out, not just buy a house in some other state. This would include selling all local property (triggering federal and state capital gains taxes), closing bank accounts, returning license plates, and not being in the state more than a certain number of days per year. In many cases, spouses might not want to move, causing (expensive) divorces. It would also mean moving away from friends, family, business associates, preferred bankers, golf buddies, favorite restaurants, beloved cultural institutions and more.
In some cases, it would mean running their businesses from out of state, which could mean being less hands-on, thus hurting their businesses. Alternatively, moving a tech business from Silicon Valley would mean giving up the immense talent pool there, the steady stream of Stanford and Berkeley graduates, the venture capitalists, and the whole tech ecosystem. In addition, many employees might quit rather than relocate to Texas or Florida.
Moving would also mean finding a suitable secluded home in a state whose climate they like and finding and hiring trustworthy staff to run the property. Austin does not have the attractions of San Francisco; Miami does not have the attractions of Los Angeles. In the end, many billionaires might well decide that while a move would save money, it would also seriously mess up a lifestyle they like and which would take time to reproduce elsewhere, even if it is possible. A billionaire leaving the state might trigger very intense tax audits of previous years since that would be the state's last chance. Finally, a fake move or failure to sever all ties with the state could result in years of litigation and uncertainty. (V)