Why are billionaires leaving California?
USA (Commonwealth Union)_ California has always been a magnet for wealthy individuals, innovative businesses, and ambitious creators. Silicon Valley, Hollywood, and the larger tech sector transformed the state into a global emblem of opportunity. But that reputation is now under threat. A rising number of billionaires, particularly in technology and cryptocurrency, are publicly exploring leaving California, and some have already left. This move is centered on a planned wealth tax aimed at the state’s wealthiest people. While advocates claim it would help balance public finances and pay for healthcare, detractors worry it will drive even more capital, skill, and jobs out of the state. What began as a policy debate has turned into a broader conversation about whether California can afford to lose the people who helped build its economic engine.
Also read: Singapore Hindu Board names its next leader: Sarojini Padmanathan steps into powerful role!
What is the proposed wealth tax?
The plan, known as the “Billionaire Tax Act,” proposes a one-time 5% tax on citizens with net assets of more than $1 billion. Unlike typical income taxes, this charge would apply to overall wealth, including startup stock, private business shares, and cryptocurrency holdings, even if those assets cannot be easily converted into cash. The idea was proposed by the Service Employees International Union-United Healthcare Workers West in late 2025. The union argues the tax could raise as much as $100 billion from roughly 200 wealthy residents. That money, supporters say, could help offset federal funding cuts and strengthen California’s strained healthcare system. Before voters can weigh in, the measure must collect 850,000 signatures to qualify for the November 2026 ballot. While that process is still underway, the reaction from the business and tech community has been swift and intense.
Who is Chamath Palihapitiya?
Chamath Palihapitiya is a wealthy investor from Sri Lanka who is known for his outspokenness in Silicon Valley. A former Facebook executive, he rose to prominence through venture capital and high-profile investments in technology and cryptocurrencies. He has become well-known not just for his fortune but also for his candid views on policy, markets, and government overreach. Palihapitiya has lived and worked in California for decades, but now he is considering relocating to Texas. His reasoning reflects a broader frustration shared by many high-net-worth individuals who feel the state is becoming increasingly hostile to wealth creation.
Also read: Hurun India Rich List 2025: The wealthiest Indian-origin CEO revealed!
Chamath Palihapitiya’s warning
Palihapitiya has been one of the loudest critics of the proposed tax. In public statements, he claimed California has already lost more than $200 billion in tax revenue as wealthy founders and investors quietly relocated to other states. According to him, the new proposal could accelerate that trend. In one widely shared post, he said people he knows with a combined net worth of around $500 billion moved quickly to leave California after the tax idea gained traction. He described the measure as resembling an “asset seizure,” warning that uncertainty alone is enough to trigger exits among the ultra-wealthy.
Palihapitiya also highlighted a practical problem: much of billionaire wealth is illiquid. Startup founders often earn relatively modest salaries while holding large equity stakes that cannot be easily sold. Under the proposal, a founder worth $1.2 billion on paper but earning $150,000 a year could be forced to raise tens of millions of dollars in cash. If the company later declines in value, the tax bill would not adjust, potentially leaving the founder financially exposed.
Venture capitalist Chamath Palihapitiya also says California’s proposed billionaire tax is speeding up the departure of the state’s wealthiest residents, a trend he believes will make the budget deficit worse rather than fix it. Palihapitiya, who has been closely tracking money leaving the state, estimates that California has already seen about $1 trillion in capital flow out. “We had $2 trillion in billionaire wealth just a few weeks ago. Now about half of that has left along with the income taxes, sales taxes, property taxes, and the jobs those individuals supported,” he wrote on X on Sunday. Even though the proposal is still being considered for the November statewide ballot, several high-profile figures in Silicon Valley are warning that it could drive founders, investors, and major sources of capital out of California.
Who are the billionaires leaving California?
Palihapitiya is far from alone. Several well-known figures have either threatened to leave or taken steps to reduce their presence in the state. Peter Thiel, co-founder of PayPal, has long criticized California’s regulatory and tax environment. Google co-founder Larry Page has reportedly shifted several business entities to Florida, a state with no income tax. Oculus founder Palmer Luckey and Figma CEO Dylan Field have both warned that the tax could force founders to sell large portions of private company stock simply to pay the bill. Crypto leaders have been especially vocal. Jesse Powell of Kraken called the proposal “theft,” arguing that billionaires would take their spending, philanthropy, and job creation elsewhere. Bitwise CEO Hunter Horsley said many of California’s most successful builders are already planning to leave within the next year. David Sacks, a PayPal veteran and current White House advisor, has also suggested he may exit the state.
In a latest development, another Silicon Valley billionaire has packed up and left California, fueling concerns that the state’s richest residents are moving their wealth elsewhere in response to a proposed tax on the ultra-wealthy. Accordingly, Google co-founder Sergey Brin, 52, shifted a large portion of his business operations out of California. The move involved relocating 15 California-based limited liability companies tied to his investments and business ventures. Brin is currently the world’s fourth-richest person, with an estimated net worth of $248.2 billion, according to Forbes.
Also read: How this Indian-origin child psychologist became a US mayor?
How could this affect California?
The departure of wealthy residents has consequences that go far beyond headline tax numbers. When billionaires leave, they often take entire ecosystems with them, like venture funding, high-paying jobs, startup offices, and charitable giving. Critics of the tax argue that losing high-net-worth individuals could actually widen California’s budget deficit. Fewer wealthy taxpayers means less capital gains revenue, fewer investments in local companies, and reduced long-term growth. That gap, they warn, may eventually be filled by higher taxes on middle-income residents or increased state borrowing. Supporters, however, see the issue differently. Lawmakers like Representative Ro Khanna argue that a limited-duration wealth tax would not destroy Silicon Valley and that those with extreme wealth should contribute more at a time of rising inequality and public frustration. To them, the threat of departure is overstated, and the state should not shy away from bold fiscal policy.
The threatening migration trends
The billionaire debate fits into a broader migration pattern already underway. Data from millions of tracked moves shows Texas emerging as the top destination for Americans leaving high-tax states. Over a recent 12-month period, more than 1.6 million adults moved to or within Texas, including over 265,000 from out of state. California accounted for the largest share of newcomers to Texas, followed by Florida and Colorado. In contrast, fewer Texans moved in the opposite direction. Analysts point to one major factor: taxes. Texas, Florida, and Tennessee have no state income tax, while many of the states losing residents rank among the highest-taxed in the country.
Overall analysis: Why the superrich are moving and what’s next?
The wealth tax issue is primarily about striking a balance between redistribution and retention. California is attempting to support ambitious public projects while dealing with budgetary constraints. Wealthy citizens, meanwhile, are becoming more mobile and likely to relocate when policies appear unexpected or punishing. California faces the risk of losing momentum as well as billionaires. Innovation thrives in environments where capital is welcome and stable. If entrepreneurs fear that success will be penalized rather than rewarded, they may decide to establish elsewhere from the outset. Whether or not the tax passes, the outrage has already changed behavior. And in a world where talent and money can cross state lines overnight, perception may matter just as much as policy.
