Top Line
A proposed ballot measure in California aimed at taxing the state’s wealthiest individuals might prompt billionaires like Larry Page and Peter Thiel to relocate. Although this measure has sparked criticism from other affluent residents, its proponents argue it could raise as much as $100 billion. However, the proposal has yet to be reviewed by state officials or put to a vote.
Important Facts
Thiel, who co-founded PayPal and Palantir, and Page, co-founder of Google, are reportedly considering reducing their ties with California by year-end due to these tax plans, according to sources familiar with their discussions.
Thiel is looking to shift his focus to other states by possibly starting an office for his investment firm, Teal Capital, away from California. Meanwhile, Page has taken steps to establish three limited liability companies in Florida.
Investor Bill Ackman expressed concerns, stating that California is “on a path to self-destruction,” suggesting that the departure of productive entrepreneurs could lead to significant losses in tax revenue and job creation.
Billionaire Chamath Palihapitiya argued on social media that the tax would drive the state’s most talented entrepreneurs to establish their companies elsewhere, ultimately hurting the middle class more than the wealthy.
Governor Gavin Newsom’s stance on the proposal remains somewhat uncertain, though he has publicly opposed a previous wealth tax initiative described as “shameful.”
What is California’s Millionaire Tax Bill?
The “Billionaire Tax Act of 2026” proposes to tax California residents with a net worth exceeding $1 billion at rates up to 5% of their assets. For those whose net worth reaches $20 billion or more by January 1, 2026, a one-time tax of $1 billion is suggested. If enacted, Page could face a tax bill of about $12.8 billion, while Thiel and Palihapitiya might owe approximately $2.35 billion each. Proponents, including the International Service Workers Union and WestCare Workers Union, claim the bill could generate $100 billion from the state’s billionaires, allocating 10% for food assistance and education programs to offset previous federal and state funding cuts in California’s healthcare system.
Contra
The California Office of Legislative Analysis has cautioned that while the tax could raise substantial amounts, it might decline by hundreds of millions annually as billionaires relocate. Critics also argue that this tax proposal may set a precedent that could later impact the middle class by eroding their assets. Supporters refute this, claiming that since the taxable assets belong to billionaires globally, moving them out of state would be infeasible, insisting the bill would primarily target the ultra-wealthy without burdening the middle class.
Chief Critic
Congressman Ro Khanna challenged the narrative that taxing billionaires benefits American innovation, asserting that extreme wealth concentration must not undermine essentials like healthcare and education. He pointed out that tech leaders like NVIDIA’s Jensen Huang, who would face a significant tax, wouldn’t have achieved their successes without the Bay Area’s talent pool.
Points to Note
The measure’s prospects hinge on collecting enough signatures—874,641—by the deadline for inclusion on the November 2026 ballot. Should it pass, it’s possible for the state legislature to amend or repeal it. The current status of signature collection remains unclear, and the requirement for transparency kicks in once the 25% threshold is reached. As of now, the tax bill has not met that threshold.
Forbes Rating
As it stands, Page is the second richest person globally, with a net worth of $257.6 billion. Huang ranks eighth at $165.4 billion, while Thiel is at 84th with a worth of $27 billion. Ackman and Palihapitiya are valued at approximately $9.5 billion and $1.2 billion, respectively.
