Billionaires like Google co-founder Larry Page and venture capitalist Peter Thiel are reportedly leaving California because of a proposed wealth tax.
David Sacks, a longtime venture capitalist who serves as President Donald Trump’s crypto czar, is another one considering an exit from the Golden State, home to more than 200 billionaires, because of the proposal.
“After blindly funding the Left for years, Silicon Valley is finally realizing what time it is. Dinner time,” Sacks wrote in a post on X this week. “And they’re on the menu.”
In another, more recent post on New Year’s Day, Sacks wrote, “As a response to socialism, Miami will replace NYC as the finance capital and Austin will replace SF as the tech capital.”
His comment came on the heels of Zohran Mamdani’s inauguration as mayor of New York City.
Tech company Replit founder Amjad Masad voiced concern about the broader implications for Silicon Valley and its world of entrepreneurs. Replit is valued at $3 billion.
“If it passes, the net effect will only be the destruction of the SV startup ecosystem,” Replit founder Amjad Masad wrote on X.
So, what is California’s billionaires’ tax?
The proposal would impose a retroactive, one time 5% wealth tax on those residents with a net worth of over $1 billion. A wealth tax is on a person’s assets, as compared to an income tax, which is levied on how much a person brings home in a given year.
If California approves the wealth tax and a person owns property or a business worth more than $1 billion, but they don’t have enough cash or liquids assets on hand, they would have to sell some of their assets in order to pay their tax bill.
The wealth tax still needs more than 870,000 signatures to get on the ballot for the November 2026 election. It is being proposed by Service Employees International Union-United Healthcare Workers West (SEIU-UHW), a California-based union.
Supporters of the proposal say the revenue from this tax would fund the gap following health care cuts.
“The billionaire class had their wealth nearly triple in the last six years, and a one-time wealth tax will only put a 5% constraint on their wealth accumulation,” Omar Ocampo, a researcher at the left-leaning Institute for Policy Studies, told CBS News. “It will not significantly impact their lives, their consumption or spending habits.”
As San Francisco State University Labor professor John Logan told an ABC News affiliate, if billionaires do choose to leave, it would only be a small number of them.
“Most tech billionaires — who could easily afford to pay this 5-percent one-off tax — are not going to upend their lives, move to Austin, Texas, move to Florida, move to other parts of the country, given all the advantages they enjoy,” said Logan.
Three companies associated with Page popped up in Florida this month, according to The New York Times. Thiel’s firm, Thiel Capital, is also considering an office outside of Florida, the report said, while noting that moving assets and residency can be complicated and that “California’s tax agency is known for its aggressive pursuit of revenue.”
What are California politicians saying
Rep. Ro Khanna, D-Calif., who represents the Silicon Valley region, spoke in support of the new tax while also advocating for guardrails against the mismanagement of money.
“There needs to be full accountability for the waste and new leadership in Sacramento,” Khanna wrote in a social media post, directing it toward venture capitalists Chamath Palihapitiya, Jason Calacanis and David Frieberg.
“Taxpayers are owed an accounting of where every penny of their tax dollars are going — a detailed receipt,” Khanna wrote.
Meanwhile, California Gov. Gavin Newsom said he is opposed to the tax proposal.
“You can’t isolate yourself from the 49 other states. We’re in a competitive environment. You’ve got to be pragmatic about it,” Newsom said at the New York Times DealBook conference in December.
“It’s not something to be panicked about, but it’s part of the broader concern and narrative that’s developed in this country of the haves and have-nots, not just income inequality, but wealth inequality.”