California is gearing up to target wealthy residents who have left the state to evade a proposed billionaire tax.
High-profile individuals like Google co-founder Sergey Brin, venture capitalist David Sachs, and Uber co-founder Travis Kalanick can expect thorough residency audits to assess whether they still consider California their home, as noted by a report.
If these billionaires cannot convincingly prove they no longer reside in California, they could face financial repercussions amounting to billions. All three made moves out of California last year after discussions arose about a 5% tax for millionaires.
Brin, now the third-richest person globally with a net worth of $270 billion, reportedly acquired a property in Nevada recently and updated his home state to Nevada in this year’s campaign finance disclosures.
Pat Dwyer, who co-founded Aligned Wealth and advises clients with substantial wealth, compared the situation to a “game of chess.”
He mentioned, “Residency can be unclear. It’s tough to prove someone truly lives in California just based on their time spent there. It’s often a legal back-and-forth that may end up in court.”
The California Franchise Tax Board plans to look into whether former residents have effectively cut ties with the state.
The board’s guidelines indicate they will assess whether each billionaire has “substantially severed ties to California upon departure or maintained ties in preparation for return.”
This review involves examining factors such as whether their children are still enrolled in California schools, where their vehicles are registered, and the locations of their medical and financial services.
Darien Shanske, a law professor at UC Davis, emphasized that those who’ve moved out will need to build a strong case across various aspects.
“Just sending someone to Nevada for a driver’s license or spending holidays elsewhere won’t cut it,” he remarked.
Billionaires like Brin have previously supported initiatives aimed at defeating wealth taxes, including audits of programs funded by such taxes.
Should the tax survive a statewide vote in November, it’s expected that those with significant resources will challenge it.
“If the tax is enacted, expect the Franchise Tax Board to face fierce legal battles from the wealthiest. They have access to top tax litigators,” noted a tax attorney in the Bay Area. The struggle will likely continue for a while,” they added.
This proposed tax would apply to anyone with assets exceeding $1 billion and would be retroactive for individuals residing in the state starting January 1, 2026. Many of the generated funds are intended for healthcare and education initiatives.
