A proposal to tax California’s billionaires is testing the limits of America’s enthusiasm for making the über-rich pay their share.
The so-called Billionaire Tax would raise an estimated $100 billion through a one-time, 5% “wealth” tax on roughly 200 California billionaires. Proponents are collecting signatures to get the tax on the November ballot.
The billionaire tax is polling well among California voters: half of them support it, and 28% oppose it, according to a survey released in March by UC Berkeley and Politico.
But California Gov. Gavin Newsom opposes the tax, and some of the state’s most prominent billionaires say they’d rather move than pay it.
Those decamping to more tax-friendly states may include Google co-founders Larry Page and Sergey Brin, PayPal co-founder Peter Thiel and venture capitalist David Sacks, according to a report from the National Taxpayers Union Foundation. Meta founder Mark Zuckerberg reportedly is eyeing a move to Florida.
In a January post on X, billionaire Chamath Palihapitiya claimed that Californians worth a collective $700 billion had already left the state.
Critics of the billionaire tax say the exodus portends failure for the measure before it has reached the ballot.
“If the goal is to raise as much revenue from billionaires as possible, having them leave is not the best way to do it,” said Andrew Wilford, director of state policy at the National Taxpayers Union Foundation, a taxpayer advocacy group.
More States Are Taxing Their Wealthiest Residents
California’s billionaire tax may be an outlier, but the “wealth tax” has taken off in recent years as a way to raise revenue from top earners in politically progressive states.
In 2022, Massachusetts voters approved the Fair Share Amendment, enacting a 4% “surtax” on incomes over $1 million to fund education and transportation. The tax generated $2.5 billion in its first year.
Washington state lawmakers recently approved a 9.9% tax on income over $1 million, in a state that levies no other income tax. The “millionaires tax” is projected to raise $3.4 billion a year.
New York City’s new mayor, Zohran Mamdani, wants to raise income taxes on Gotham residents earning more than $1 million, boosting the city’s top tax rate from roughly 3.9% to 5.9%.
The notion of taxing the very wealthy has populist appeal in an era of rising income inequality.
The top 10% of wealthy Americans now control 60% of the nation’s wealth, according to a 2024 report from the Congressional Budget Office.
The 12 wealthiest billionaires, alone, hold more wealth than the poorer half of the world’s population, according to a 2026 Oxfam report.
Gallup polling shows only 12% of Americans think upper-income people pay too much tax, while 58% believe they pay too little.
Will a ‘Wealth Tax’ Chase the Wealthy Away?
The standard objection to taxing the rich holds that the levies will chase them away.
Responding to a cavalcade of headlines about California billionaires leaving the state, Newsom told Politico, “This is my fear. It’s just what I warned against. It’s happening.”
The billionaire tax might still raise billions of dollars in revenues, but it’s a one-time tax. If billionaires leave California for good, their future earnings leave with them.
“If you have people who leave and never come back over a onetime tax, you have decades of income tax that you’ll never get back,” said Jared Walczak, senior fellow at the nonpartisan Tax Foundation.
Supporters of the California tax say those fears are overblown.
“For the people who are going to pay this, the California wealth tax will have zero impact on their standard of living or their kids’ standard of living or their grandkids’ standard of living,” said Carl Davis, research director at the left-leaning Institute on Taxation and Economic Policy. “It’s a drop in the bucket.”
Based on past experience, Davis predicts the number of billionaires who might leave California over the billionaire tax “will be greater than zero, but still very, very small.”
Research is divided on whether tax hikes prompt the wealthy to move.
Massachusetts has seen an increase in millionaires, rather than a decrease, since the state enacted higher taxes on high earners, according to a report from the progressive Institute for Policy Studies.
But every state has seen an increase in millionaires, the Tax Foundation notes in a rebuttal, and Massachusetts has gained them at a slower rate than most other states.
Here’s Why the Billionaire Tax Targets Wealth, Not Income
Most prior wealth taxes have targeted income. The California initiative focuses instead on wealth.
Income taxes often fail to tap the wealth of the wealthiest Americans, studies show, because much of their wealth doesn’t come from taxable income.
Very wealthy Americans avoid taxes by amassing wealth in stocks and real estate. Those assets tend to grow in value, but the owner doesn’t pay capital gains taxes until they sell. When they die, assets often pass tax-free to heirs.
“A large amount of income is never subject to tax at all,” Davis said. “It’s income that never appears on tax forms. It just vanishes into thin air.”
The collective wealth of California billionaires rose from $300 billion in 2011 to $2.2 trillion in 2025, according to a fact sheet from proponents of the billionaire tax.
They term the tax an “emergency” to offset “catastrophic” federal cuts in funding for health care, food assistance and education during the Trump administration.
“My favorite solution would be, let’s have some federal investment into healthcare that would make it more affordable,” said Janelle Jones, senior fellow at the progressive Groundwork Collaborative. “But I don’t think that’s going to happen.”
Even as they mull moves to other states, California billionaires are raising millions of dollars to fight the billionaire tax if it winds up on the November ballot.
If voters approve it, observers say, the billionaire tax will deliver the ultimate test of how far cities and states can go in taxing their wealthiest residents, and whether those taxpayers will stick around.
This article originally appeared on USA TODAY: Californians want to tax billionaires. They’re threatening to leave.
Reporting by Daniel de Visé, USA TODAY / USA TODAY
USA TODAY Network via Reuters Connect
