California’s economy is reeling as nearly $1 trillion in wealth has reportedly vanished in just the past month due to concerns over a looming “Billionaire Tax” proposal.
According to venture capitalist Chamath Palihapitiya, one of the state’s wealthiest residents, the proposed measure—a one-time 5% tax on individuals worth over $1 billion as of Jan. 1, 2026—has triggered an exodus of assets and operations. Gov. Gavin Newsom opposes the plan, while a recent poll by David Binder Research shows voter support dropping to 41% after hearing arguments from both sides. High-profile figures like Google co-founder Larry Page and In-N-Out heiress Lynsi Snyder have already moved significant resources out of state.
According to the New York Post, the issue has sparked intense debate over California’s fiscal future and the potential consequences of driving away its wealthiest residents. While supporters see the tax as a solution to budget shortfalls, critics warn of a catastrophic economic backfire.
Reports indicate that California’s roughly 215 billionaires are snapping up properties in states like Florida and Tennessee, with some relocating corporate offices as well. Larry Page, for instance, has tied over 45 LLCs to inactivity or relocation, alongside purchasing a $71.9 million mansion in Miami. Sergey Brin, another Google co-founder, has shifted 15 California LLCs to Reno, Nevada.
Lynsi Snyder, the In-N-Out heiress, has established a second corporate hub in Tennessee. Even Palihapitiya himself admitted he’s giving “serious consideration” to moving to Texas. This trend, financial experts caution, may only be the beginning.
Palihapitiya has sounded the alarm on the scale of the loss, claiming the billionaire wealth base expected to be taxed has plummeted from $2 trillion to $1.3 trillion. He predicts that by 2026, it could dip below $1 trillion, accompanied by endless legal battles. The sum lost is staggering—enough to fund NASA for four decades or buy the entire NFL multiple times over.
“If they don’t kill this ballot initiative and entice those folks to come back, the California budget will be massively upside down,” Palihapitiya warned. His words cut to the heart of a growing concern: without this wealth, the state may face impossible fiscal choices.
Palihapitiya argues the only options would be slashing waste and fraud—an uphill battle—or hiking taxes on the middle class, a far easier but deeply unpopular move. This kind of policy squeeze is exactly what critics fear when government overreaches with punitive taxation schemes.
The SEIU-United Healthcare Workers West union, leading the push for the 2026 Billionaire Tax Act, insists the revenue would bolster health care and public schools hit by federal cuts. Suzanne Jimenez, the union’s chief of staff, called the 5% levy a “very minor tax.” But when “minor” means billions, it’s hard to see how the ultra-wealthy won’t keep packing their bags.
Public opinion seems to be aligning with Gov. Newsom’s opposition. After being presented with arguments from both sides, a new poll shows opposition to the measure climbing to 53%. Newsom’s team argues state-level wealth taxes spark a “race to the bottom,” a view that appears to resonate.
Izzy Gardon, a representative for Newsom, reiterated the governor’s stance, warning of the broader economic fallout. It’s a rare moment of clarity from Sacramento, where leaders often chase progressive policies without weighing the long-term cost. This tax, if it reaches the November 2026 ballot, could be a turning point—or a breaking point.
Jimenez and the union argue the tax is a direct fix for federal health-care cuts, a dollar-for-dollar patch. Yet, when billionaires are fleeing en masse, that math starts to look like wishful thinking. The revenue might never materialize if the tax base keeps shrinking.
The retroactive potential of the tax’s start date only adds fuel to the fire, spurring even faster exits. If this measure becomes law, the state risks not just a financial hit but a reputational one—California could be seen as hostile to success itself.
Critics point out that punishing wealth creation doesn’t just hurt the elite; it ripples down to jobs, innovation, and community investment. The state’s budget could end up in a tailspin, with everyday Californians footing the bill through higher taxes or slashed services. Ultimately, this debate isn’t just about numbers—it’s about what kind of future California wants. Chasing short-term revenue at the expense of long-term stability is a gamble. And with $1 trillion already out the door, the house might already be losing.