Inside The Billionaire Tax Plan That Has Rich Californians Ready To Move |
The proposed California wealth tax that has some of the state’s billionaires fuming, threatening to move (and even taking steps to do so), is an elaborately crafted and novel plan that’s a long way from becoming law, let alone being enforced. It is designed as a ballot initiative, which, if it gets enough signatures, could be put in November before mercurial California voters, who have famously approved prior tax-the-rich measures, as well as, back in 1978, Proposition 13, strictly limiting the state’s real estate taxes.
Already, the scheme faces opposition from not only the business community, but also California Governor Gavin Newsom. Critics claim it could spark an exodus of tech entrepreneurs (and their businesses and jobs) from the state, leading to a long term decline in income tax revenues–claims the drafters reject.
The “2026 Billionaire Tax Act” would impose a one-time 5% “excise” tax on the net worth of the state’s billionaires. Four academics who helped craft the proposal have estimated (based, they say, on Forbes’ billionaire valuations), that it would raise about $100 billion from 200-plus California billionaires, with that money flowing into the state’s coffers between 2027 and 2031 and going to a dedicated fund, primarily to make up for federal Medicaid cuts. The tax base is broad, covering private businesses, public stock, personal assets above $5 million and retirement accounts above $10 million. The big exception is for real estate held directly or through a revocable trust–a provision included in part to avoid running afoul of Proposition 13, which limits taxes on real estate to 1% of assessed value a year, while also capping assessment increases at 2% a year, except when a property is sold. But real estate that’s held in a partnership or is part of a business’ value could get hit.
According to a 32-page description of the initiative filed in late November with the state attorney general, the rich could elect to pay the one-time levy over five years, with interest. Those who have primarily non-publicly traded, illiquid assets (say, ownership in a private startup) could set up an “Optional Deferral Account” contract with the state deferring taxes until their stake is sold or they withdraw cash from their holdings.
The proposal, sponsored by the Service Employees International Union–United Healthcare Workers West, was first announced in October and was explicitly written to prevent billionaires from moving to avoid it or from playing valuation games. While the levy is based on a billionaire’s net worth as of December 31, 2026, tax residency is determined as of January 1, 2026.
Some billionaires did apparently try to move before the end of 2025. Notably, Larry Page the cofounder of Google and the largest individual shareholder in Google parent Alphabet, spent $173.5 million on two Miami properties in December as companies associated with him moved out of the state, just under the wire. But ditching California can be a lengthy process and the state’s tax agency has been aggressive and sometimes successful in challenging hasty moves or........