Billionaires are following Elon Musk out of California

California's proposed Billionaire Tax Act would impose a one-time 5% wealth tax on residents worth over $1 billion, potentially raising $100 billion from about 200 people. Larry Page and Peter Thiel are reportedly making plans to leave. Tech founders are calling it an organized seizure. Governor Newsom opposes it. The vote is in November 2026, but the residency cutoff is January 1, 2026, which is why billionaires are moving now.

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Episode Transcript

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Larry Page, who's the Co founderof Google, has discussed leaving
California by the end of this year.
Peter Thiel, the venture capitalist who Co founded P Pal
and Palantir, is exploring moving his investment firm to

(01:28):
another state. Both men are responding to the
same thing. A proposed ballot measure that
would tax California billionaires 5% of their total
wealth. It's not 5% of their income.
That's 5% of everything that they own.
For Page, whose net worth is estimated at $250 billion, the
tax bill could exceed 12 billion.

(01:50):
For teal, worth around 27.5 billion, the bill would top $1.2
billion. The measure has not even
qualified for the ballot yet, and billionaires are already
filing paperwork to incorporate in Florida.
And what happens when a state tries to tax the people who can
most easily leave? They have the resources.

(02:12):
They can do whatever they want. And the answer involves a
healthcare union, federal budgetcuts, a Christmas party themed
around the American Revolution and a debate that has tech
founders calling this an organized seizure of private
property. The measure could raise $100
billion from about 200 people. Governor Gavin Newsom has
already come out against it. So have some of the most

(02:34):
prominent names in Silicon Valley, and we'll get right into
that after this very short break.
California is home to more billionaires than any other
state in the country, about 200 to 250 of them, depending on how
you count them and the proposed tax targets.
All of them. In October of 2025, the
healthcare Workers Union called SEIU United Healthcare Workers W

(02:59):
filed paperwork to place the California Billionaire Tax Act
on the November 2026 ballot. Now the union says federal
health care cuts under the One Big Beautiful Bill Act will
strip roughly $100 billion from California healthcare over the
next five years. Now the wealth tax is their
answer to that. They're going to get that money

(03:19):
back. The mechanics are very
straightforward. Any California resident with a
net worth exceeding a billion dollars would pay a one time tax
equal to 5% of their total. Assets included stocks, bonds,
business interests, intellectualproperty, artwork, anything of
value except real estate held directly, pensions in retirement

(03:39):
accounts up to $10 million. The tax would apply to wealth
held as of December 31st, 2026. And the catch is residency.
If you were a California resident on January 1st, 2026,
you owe the tax even if you leave before the measure passes.
That makes this retroactive. The ballot initiative would not

(04:00):
be voted on until November of 2026, and by then the residency
cut off would already be about 10 months in the past.
Now. The retroactive structure is why
some billionaires are moving right now, not waiting to see if
the measure qualifies or passes.In mid-december, 3 limited
liability companies associated with Larry Page filed documents

(04:21):
to incorporate in Florida. It's a standard early step for
someone establishing residency in a new state.
Page has been a long time residence of Palo Alto.
Peter Thiel owns a home in the Hollywood Hills and runs Thiel
Capital out of LA. According to the New York Times,
He has explored opening an office at another state and
spending more time outside of California.

(04:42):
And earlier this month, Peter Thiel hosted a Christmas party
at his Hollywood Hills mansion. The theme was all things
Britain, the country American revolutionaries revolted against
in 1975. Axor After Taxation Now guests
reportedly discussed the implications of the proposed
ballot measure at that party. Now, the union backing the

(05:04):
measure says the revenue was split 90% to healthcare programs
and 10% to K through 12 education and food assistance.
Dave Reagan, president of SEIUUHW, has framed the tax as
an emergency response. Without action, he says,
millions of people will lose healthcare, an untold number
will go without treatment, and there will be tragedy after

(05:26):
tragedy after tragedy. And the union argues that
California's billionaires built their wealth using the
advantages of California, its universities, its talent pool,
its infrastructure, and should help fund services when federal
money disappears. Now post posters on X say the

(05:47):
measure will eventually bankruptall of California.
And that was Chamath Palahapitia.
I was a tech investor and formerFacebook executive.
It's predictable but also precise.
If you get the billionaires out of there, what you know, what

(06:08):
happens to their money, it goes with them, right?
The most talented entrepreneurs can and will leave the state,
and they'll leave for states that do not tax wealth.
And when they leave, they take their income taxes with them.
They take their homes with them.All the money that they spend in
that state goes with them. It goes to another state,

(06:29):
Florida, possibly California's top 1% already pay more than
half the state's income tax revenue.
And who pays that after they go?Palmer Luckey, the founder of
Audrill and one of the most vocal critics, raise a different
problem. The tax applies to paper wealth,
not actual cash. Lucky sold his first company,

(06:50):
Oculus, to Facebook for $2 billion.
He paid hundreds of millions in taxes on that sale.
He then used the remainder to start Andrill, a defense
technology company that now employs 6000 people.
His stake in Andrill is worth billions on paper, but he can't
spend that money. He can't sell large chunks
without disrupting the company or triggering capital gains

(07:11):
taxes, and under the proposed tax he would owe billions in
cash based on the value of shares he cannot easily
liquidate. And if he can't pay, the state
could seize his home and garnishhis wages, which is crazy. 1
market correction, one nationalization event, one
prohibition of divestiture and I'm screwed for life.

(07:35):
He posted. That's his phrasing, not mine.
Dylan Field, who's the Co founder and CEO of Figma,
pointed out that founders and early employees could get caught
up in the tax without the ability to use company stock to
pay for it. Start up compensation often
consists of equity and companiesthat have not gone public.
I've been part of that. When you start a company with

(07:57):
somebody or when you are part ofthe founding team, If you we
founded a company with about 5 people and you get early equity,
right? You get shares in the company
before it goes public and you don't get any money for those
shares. You actually buy into them
sometimes and you have to pay money for those shares instead
of just give being given them ifthat wasn't part of your deal,

(08:20):
right? So sometimes people buy $10,000
worth of shares because they believe so much in this company
and they want to make it happen and you know what?
They can't use those shares because the company isn't worth
anything yet right before the IPO.
They can't convert it to cash until an IPO or an acquisition.
Now, the proposed tax would treat that equity as taxable

(08:43):
wealth anyway, so you can't. I mean, you're going to go
bankrupt. And if the company later has a
down year, the founder might be forced to lower the company's
valuation through a down round just to meet the tax
application. OK, so Dave Friedberg, Co
founder of Ohalo Genetics, called the measure and organized

(09:03):
government seizure of private property from citizens who have
already paid other state taxes that can total 53% in
California. He compared it to politics in
the Soviet Union, Cuba, Venezuela, France and Norway.
Now the political response has been very predictable.

(09:23):
RO Khanna, who's a Democrat, represents part of Silicon
Valley flag The New York Times story about Page and teal
potentially leaving. He added a line echoing
President Franklin Roosevelt said I will miss them very much,
kind of said he opposes taxes onunrealized gains and supports
workarounds for founders with illiquid assets.

(09:43):
But he defended the broader principle.
Tax dollars helped build the AI industry, he wrote, and we
cannot have a nation with extreme concentration of wealth
in a few places. But where 70% of Americans
believe the American dream is dead and healthcare, childcare,
housing and education are unaffordable for most people.
His argument is the innovation will not be stifled by a tax.

(10:05):
Wealth, political dysfunction and social unrest definitely
will. But that's the divide. 1 side
sees the taxes theft, the other sees concentrated wealth as a
theft to social stability. Neither sides moving on this,
they're staying focused. Governor Gavin Newsom has
opposed this measure. So has the California Taxpayers

(10:28):
Association, which warned that the tax would chase high income
residents out of the state and faces serious legal challenges.
The Legislative Analyst's Office, California's nonpartisan
fiscal advisor, confirmed the legal uncertainty.
The measure could violate the dormant Commerce Clause of the
United States Constitution because it taxes worldwide
assets. It could violate due process

(10:51):
protections because it is retroactive.
It could be classified as a property tax, which California
restricts under Article 13 of its constitution.
California Taxpayers Associationestimated that a previous
smaller wealth tax proposal would cost 200 to $300 million
annually just for administration.

(11:12):
Now the current initiative allocates only 15,000,000 for
administration. And, of course, strike down the
measure after it passes. The state would have spent years
litigating tax it cannot collect.
Now. The backdrop is income
inequality that has grown stark.Congressional Budget Office data
shows that the share of wealth held by families in the top 10%

(11:34):
is around 69%. The share held by families in
the bottom 50% is 3%. That gap has widened over 33
years. The billionaires threatening to
leave California did not create that gap alone, but they
represent its most viable edge now.
Companies have already been leaving California for states
with lower taxes and fewer regulations.

(11:56):
Elon Musk moved Tesla and SpaceXto Texas.
New data centers in the AI infrastructure being built
outside of California, where land, water and electricity are
more more available and cheaper,and the wealth tax could
accelerate that trend. Gary Tan, CEO of Y Combinator,
told the New York Post Post thatthe measure would cause a
Stampede of unicorns out of California.

(12:19):
Other states would reap the benefits of entrepreneurs,
technology, and the jobs that California enjoys now.
Now, the measure still needs about 875,000 valid signatures
to qualify for the November 2026ballot.
Signature gathering is expected to begin in early 2026, and if
it qualifies, it requires only asimple majority to pass.

(12:43):
You need internal polling suggests strong voter support,
though SEIUUHW has not really specific numbers.
And the question is whether voters will see this as a fair
ask of people who can afford it,or is the first step toward a
broader wealth tax that reaches further down the income ladder.
Robert Reich, former labor secretary under Bill Clinton,
has endorsed the measure as a wealth tax that will work.

(13:06):
Bill Ackman, the hedge fund manager, warned that California
is on a path to self destruction.
Hollywood has already toast, he wrote, and now the most
productive entrepreneurs will leave, taking their tax revenues
and job creation elsewhere. The vote's eleven months away.
Some billionaires are not waiting to see how it turns out.
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