Every politician eventually runs out of money for others to spend. It seems like blue states are losing governors and legislators quicker than their counterparts elsewhere.
There’s a significant wave of new tax proposals popping up in states like California, New York, Washington, Massachusetts, Michigan, and Connecticut. What links these states? They all seem to think that digging deeper into the pockets of their higher earners is the solution to their self-created financial mess. And if these residents choose to leave, they’re even considering an exit tax! It raises the question: is this really America?
We’re talking about a departure tax. It’s like they know you’re leaving because of the poor tax climate here, and they want you to remember them when you go.
California’s disdain for capitalism is undermining its wealthy contributors
Current proposals on the table
The centerpiece of this movement is California’s millionaire tax initiative. This measure would impose a one-time 5% tax on the total net worth of anyone residing in the state with assets totaling $1 billion or more. It’s not just income; it’s their overall net worth. Imagine what it means for an entrepreneur whose wealth is tied up in a private company providing jobs for thousands. And consider how many millionaires were created by these ventures. If you have a mere $2 million in cash but a paper valuation of $100 billion, California could send you a tax bill for $5 billion. This isn’t just tax policy; it feels more like an asset takeover, masked as fairness.
Washington, which has never had an income tax before, just introduced a 9.9% tax on incomes exceeding $1 million. As soon as this bill passed, Starbucks founder Howard Schultz announced his move to Florida. Not surprising, right? Starbucks has now decided to relocate its headquarters to Tennessee. It’s clear that founders and companies are making these moves together—a strong message from states with high taxes and expenditures.
In Michigan, there’s a plan to change the state constitution to set a top tax rate of 9.25% for incomes beyond $500,000. In Detroit, residents face nearly a 12% combined state and local tax rate. Meanwhile, just across the border in Ohio, it’s a flat income tax of 2.75%. Indiana has a rate of 2.95%. You really don’t need to be a financial expert to see the difference. All it takes is a moving truck.
Seahawks GM warns Washington’s new ‘millionaire tax’ could hinder free agent recruitment
This scenario points to poor leadership decisions.
Let me clarify: I’m not here to defend billionaires; I’m focused on defending economic reality.
Right now, the top 1% of California’s taxpayers are responsible for almost half of all income tax revenues in the state. Half! That’s not a stable revenue model; it’s a shaky structure built on sand. The moment not only billionaires leave, but also business owners earning $500,000, startup investors, and executives, the whole thing collapses.
Mamdani’s proposed inheritance tax might push wealth out of state, critics claim
This trend is already visible. Six of California’s billionaires left before the proposed residency deadline of January 1, 2026. Those six brought with them $27 billion in potential tax revenue. Larry Page, co-founder of Google, has invested $170 million in Miami properties, relocating his family’s business from California. David Sachs, a long-time resident of Texas, termed the proposed tax “asset foreclosure” as he prepared to leave.
From my three decades of experience as a financial advisor, I can tell you this: wealthy people don’t wait until bills pile up. They plan ahead. The withdrawals we see today were decisions made 18 months ago in legal planning sessions. Exits that haven’t occurred yet are under consideration right now.
Why this should matter to you, even if you’re not a millionaire
Washington Democrats passed an income tax knowing it wouldn’t hold up constitutionally—that was intentional
At this juncture, this goes beyond abstract policy debates and starts to affect daily life.
When high-income earners exit a state, those left behind carry the financial burden. Services will be cut, or taxes will rise for the next group of earners: $150,000, then $100,000, and ideally beyond. States like California, New York, and Michigan didn’t create exceptional universities, hospitals, and infrastructure by chance. Their success stems from a vibrant private economy. But dismantling that economy could lead to its complete shutdown.
There are also broader economic signals being sent here. Once Washington shifts from being a zero-income tax state, being a successful entrepreneur in California becomes a risky endeavor. And with Michigan’s almost 12% tax on high earners, innovation, capital, and job creation could easily migrate elsewhere—specifically to places like Florida, Texas, Tennessee, and Nevada.
California’s ongoing urban exodus could dramatically affect the state in three distinct areas
What steps to take now
If you reside in any of these states and are building substantial wealth through your business, investments, real estate, or retirement accounts, this isn’t just another article to glance at. It’s a crucial discussion to have with your financial advisor and estate planner. Some of these proposals feature an exit tax for residents who depart within five years of enforcement. The time to develop a proactive plan is now—before the ballot measure passes or the bill is signed.
Wealth is fluid. It’s organized, mobile, and has choices.
Currently, those choices seem to gravitate more towards states like Florida rather than California.
