The Countdown Begins: California's $100 Billion Wealth Tax and the Billionaire Exodus

In December 2025, Google co-founder Larry Page quietly made a move that caught the attention of tax authorities and wealth experts alike. He purchased two Miami properties for $173.5 million, while his affiliated companies relocated out of California around the same time—a calculated maneuver before what many believe to be a critical deadline. This wasn’t just real estate speculation; it was a strategic response to California’s proposed Billionaire Tax, a policy that threatens to fundamentally reshape how the state’s super-rich manage their net worth and calculate their tax obligations.

Page’s relocation wasn’t impulsive. With California voters poised to decide the fate of this wealth tax in November 2026, some of the nation’s richest individuals are already making difficult choices about where to call home. The proposal would impose a one-time 5% levy on the net assets of billionaires—a move designed to raise approximately $100 billion from over 200 California residents worth nine figures or more. While supporters argue it’s a necessary step to address wealth inequality, critics warn it could trigger an unprecedented exodus of tech talent and capital that would cripple the state’s recovery.

How Billionaires Calculate Their Net Worth and Tax Exposure: The Larry Page Precedent

The mechanics of California’s proposed wealth tax are deceptively simple but historically complex to enforce. The tax would apply to a broad range of assets: equity in both public and private companies, personal possessions valued above $5 million, and retirement accounts exceeding $10 million. Wealthy residents would have the option to pay in installments over five years with interest, or to defer payments entirely if their assets are primarily illiquid—such as startup equity that hasn’t yet generated cash proceeds.

But determining a person’s true net worth is where California faces its most significant challenge. Historical precedent suggests the state won’t back down easily. In 2021, the California Office of Tax Appeals ruled against Canadian comedian Russell Peters, concluding he was a California tax resident despite his claims of Nevada domicile. Peters maintained a home in Nevada (a state with no income tax), registered three companies there, claimed a Canadian address, and spent more days outside California than within it. Yet the court found that his California property holdings, his daughter’s residence in the state, and his credit card statements—which revealed he spent more time in California than anywhere else—were sufficient to override his non-resident declaration.

The Russell Peters case built on an even stronger precedent. In 2021’s Bracamonte decision, a couple attempting to flee California to avoid taxes on a business sale worth $17 million lost their case entirely. The ruling established a broad standard that requires courts to examine all evidence comprehensively: taxpayer registration information, personal and professional ties, actual time spent in state, and property ownership. For billionaires with decades of Silicon Valley connections, massive social networks, country club memberships at places like Pebble Beach Golf Links, and childhood memories of Palo Alto, proving an intent to truly sever California ties becomes extraordinarily difficult.

“The determination of California tax residency is entirely subjective,” explains Shail P. Shah, a tax attorney in San Francisco who specializes in residency disputes. “These rules essentially require judges to determine whether a California taxpayer truly intends to permanently leave California and sever all ties with the state.” For tech billionaires who built their net worth in Silicon Valley, proving that intention is “no easy feat,” Shah notes.

Assets, Valuations, and Loopholes: Understanding the Wealth Tax Framework

The proposal’s drafters anticipated these challenges and built safeguards directly into the legislation. The bill explicitly prevents billionaires from evading taxes through relocation or manipulating asset valuations. For unlisted companies, the default valuation method is “book value plus annual book profit multiplied by 7.5”—and crucially, the valuation cannot fall below the company’s price in its most recent financing round. If billionaires believe this valuation is too aggressive, they can submit independent appraisals to challenge it.

Personal assets like artwork and jewelry face similar scrutiny. Their valuation cannot drop below their insured amount. Charitable donations are deductible from taxable net worth, but only if donors sign legally binding agreements by October 15, 2025. Real estate purchased directly in 2026 won’t qualify for the Proposition 13 exemption if deemed motivated by tax avoidance.

The timeline is no accident. Tax residency is determined on January 1, 2026, but the tax applies retroactively to anyone who was a California resident on that date. This creates a dangerous window for billionaires attempting to establish non-residency before the November 2026 vote. Jon D. Feldhammer, a tax lawyer heading Baker Botts LLP’s San Francisco office, has been consulting with multiple billionaires exploring exits. “Several billionaires have contacted me, and they are seriously considering moving out of California, completely severing ties with the Golden State, and even planning to move their businesses along with it,” Feldhammer explains.

But isn’t January 2026 too late? Shouldn’t billionaires have acted sooner? Feldhammer’s response reveals why the timeline matters more than it appears. In December 2025, his team published an analysis identifying eight possible constitutional challenges to the bill—from federal and state constitutional perspectives. One critical vulnerability involves retroactivity itself. While the U.S. Supreme Court has allowed previous tax amendments (including several retroactive provisions in the Trump Big and Beautiful Act passed in July 2025) to take effect retroactively to the beginning of the year, Feldhammer points out that the current Supreme Court’s stance is nuanced. “To maintain your defense against the bill’s retroactivity, it’s best to relocate before the vote, and the earlier the better,” Feldhammer advises his billionaire clients.

Eight Constitutional Paths to Challenge California’s Wealth Levy

The legal landscape is far from settled. Critics ranging from Governor Gavin Newsom to business groups warn that the proposal could trigger an economic exodus that would harm California’s recovery. The state’s relatively new AI boom provides an especially delicate backdrop—any policy signaling that billionaire tech founders aren’t welcome could ripple through the venture capital ecosystem.

Beyond the constitutional questions, implementation poses formidable practical challenges. Before voters can even cast ballots, the proposal must be certified by state officials and collect 875,000 valid signatures by June 2026. Even if it passes, it will face “fierce litigation” from affected parties, as Feldhammer characterizes it.

The bill’s supporters—primarily the Service Employees International Union – United Healthcare Workers Western Division (SEIU-UHW), which initiated the proposal in October 2024—countered these concerns in a December 2025 expert report. Four scholars (including UC Berkeley economist Emmanuel Seth, who directs the Stone Center for Wealth and Income Inequality) argued that the U.S. Constitution’s general injunction against wealth taxes applies only at the federal level. States, they contended, “have long been recognized as having the power to levy wealth and property taxes on residents, provided that due process and other constitutional protections are followed.” The proposal also explicitly amends the California State Constitution to preempt state-level constitutional challenges.

David Gamage, a tax law professor at the University of Missouri and one of the proposal’s architects, dismissed warnings that billionaires would flee. “This is simply alarmist. It’s all talk and no action, with no real basis in reality,” Gamage stated.

But California’s nonpartisan Legislative Analyst’s Office (LAO) presented a starkly different conclusion. In December 2025, the office warned that the bill could cost California hundreds of millions of dollars—potentially much more—annually in personal income tax revenue. Feldhammer suggested even that estimate might prove too conservative. “If the billionaires I’m consulting with do relocate their businesses out of California, the state won’t only lose income tax revenue from these billionaires but also from personal income tax paid by their employees and corporate income tax revenue,” he cautioned.

The Double Tax Dilemma: When Net Worth Becomes a Liability

The economic arithmetic reveals the stakes. California’s top individual income tax rate is 13.3%, including a surtax approved by voters in 2004. In 2012, voters further approved higher tax brackets for individuals with taxable income exceeding $250,000 or married couples earning above $500,000. That policy, initially temporary, has been extended through 2030. Currently, half of California’s individual income tax revenue comes from the wealthiest 2% of earners.

Yet billionaires contribute far less than their net worth might suggest. According to research cited by the proposal’s drafters, billionaires pay only about 2.5% of California’s total personal income tax revenue. The reason is straightforward: unlike ordinary high-earners (corporate executives, doctors, lawyers, small business owners), billionaires have sophisticated tools to avoid converting their wealth into taxable income. They maintain luxurious lifestyles by pledging stocks to obtain loans, avoiding the capital gains taxes triggered by actual sales.

“A billionaire tax would directly correct this injustice by taxing all wealth, regardless of whether it has been converted into taxable income,” the four scholars wrote.

Yet the practical consequences are far more complex. Consider a startup founder whose company valuation soars by year-end 2026, making her a paper billionaire. If the company’s valuation subsequently plummets before she cashes out, she still must pay taxes on wealth that no longer exists. Alternatively, even if valuation holds steady, paying the wealth tax requires selling shares—and those proceeds face a combined federal and California capital gains tax of 37.1%. To net enough after capital gains taxes, the founder must sell even more shares, continuously diluting her equity stake in the company she built.

San Francisco tax attorney Shah voiced a different concern: the controversy itself, regardless of the bill’s ultimate fate, sends a troubling signal. “Currently, the booming artificial intelligence industry is providing strong momentum for the Bay Area’s recovery, but everyone is worried that such tax increases will drag down that momentum. Everything in excess has its limits,” Shah cautioned. Feldhammer agreed, noting that “the negative impact has already occurred and continues to escalate.”

From California to New York: The Great Billionaire Tax Race

California isn’t navigating this terrain alone. A wave of “tax the rich” initiatives is spreading across major U.S. cities and states, emboldening politicians to push aggressive wealth redistribution agendas. New York City exemplifies this trend. The city already boasts the nation’s highest combined state and city income tax rate: a 10.9% state top rate plus a 3.9% city-level top rate. Newly elected Mayor Zohran Mamdani campaigned on a promise to raise the city-level tax rate on incomes exceeding $1 million to 5.9%, bringing the combined rate to 16.8%.

Billionaires spent heavily to block Mamdani’s campaign, yet voters elected him in November 2025 anyway. His victory sends a powerful signal: in major Democratic strongholds, voters appear willing to punish billionaires through the ballot box. This outcome deeply concerns California’s billionaire community—and explains the urgency behind relocations like Larry Page’s Miami purchases.

As California moves toward its November 2026 referendum, the state faces a genuine fork in the road. If voters approve the wealth tax, the state will attempt to collect approximately $100 billion from billionaires whose net worth now reflects decades of accumulation in Silicon Valley’s tech ecosystem. The tax would fund California’s Medicaid programs between 2027 and 2031, potentially reshaping state social spending.

Yet California will almost certainly witness fierce resistance—both in courtrooms and on the streets, as billionaires deploy every constitutional argument and relocation strategy available to them. The Larry Page precedent shows the game is already underway. Whether California can successfully extract meaningful net worth-based taxation from its billionaire residents without triggering a broader economic exodus remains the defining question of the state’s economic future.