California’s push to impose a one-time 5% “wealth tax” on its roughly 200 billionaires-projected to raise $100 billion-is triggering threats of relocation from some of the state’s wealthiest residents.
Backers are gathering signatures to place the measure on the November ballot. A March UC Berkeley/POLITICO poll shows 50% of voters support it, with 28% opposed.
Governor Gavin Newsom opposes the tax, echoing concerns that it could accelerate an exodus. Reports suggest Google co-founders Larry Page and Sergey Brin, PayPal’s Peter Thiel, venture capitalist David Sacks, and Meta’s Mark Zuckerberg are considering moves to lower-tax states like Florida.
Billionaire Chamath Palihapitiya claimed in January that Californians worth $700 billion have already left.
Critics argue that chasing away billionaires defeats the purpose of long-term revenue generation. “If they leave permanently over a one-time tax, you lose decades of income tax,” said Jared Walczak of the Tax Foundation.
Supporters counter that the tax would barely dent billionaire fortunes. “It’s a drop in the bucket,” said Carl Davis of the Institute on Taxation and Economic Policy.
Unlike traditional income taxes, the proposal targets unrealized wealth-stocks, real estate, and other assets that often escape taxation until sold or inherited. Proponents call it an “emergency” response to federal funding cuts in healthcare, food assistance, and education.
Meanwhile, California billionaires are funding opposition efforts ahead of a potential ballot showdown that could redefine state-level wealth taxation nationwide.