While Governor Gavin Newsom (D-Calif.) is initially focusing on billionaires, the idea of implementing retroactive taxes—even for those who have left California—should raise concerns among all residents or former residents of the state.
“Newsom is advocating for a retroactive tax on millionaires that would affect around 220 billionaires residing in California by 2025,” according to a report. This is a clear indication of both the state’s financial struggles and the growing realization that it is driving its wealthiest citizens away.
The proposed legislation, called the Billionaire Tax Act of 2026, would levy a “one-time” 5% tax on assets exceeding $1 billion for individuals who meet that threshold. But there’s a twist…
“Even though we’re basing it on wealth in 2026, it will also target billionaires who lived in California in 2025,” the report noted. “So, it looks like you can’t really escape with your wealth intact. This seems more like a penalty for those who hoped rationality would prevail in California.”
Taxing billionaires… well, who really cares?
But retroactive taxation? That should make everyone a little uneasy.
What business leaders and entrepreneurs really desire isn’t merely lower taxes or fewer regulations. Surprisingly, many big companies even take advantage of hefty taxes and stringent regulations to eliminate competition. What is crucial for any industry is Stability. Higher taxes lead to more costly and cumbersome regulations, but if these are anticipated, they can be managed. Stability is key—even if it comes at a high price.
What they find unacceptable are unexpected changes, like sudden retroactive taxes. This is one major reason why retroactive taxation is problematic; it could deter corporations and wealthy individuals from staying in California.
Another issue with a retroactive tax is that it sends a message to current and former residents, as well as folks planning to move there, that “Hotel California” is, indeed, a reality. You can check out whenever you want, but leaving isn’t so simple.
One of the great freedoms in America is our mobility. Unlike some Europeans, who are stuck in their countries, we can leave California if we want to escape what feels like creeping oppressive policies. But what if you can’t easily leave? What if, once you live there, you’re at risk of losing your money indefinitely, even retroactively?
Personally, I feel this is already happening. Not kidding. A few months back, California placed a lien on my account for $3,500, claiming I owed taxes from 2013 and 2014. However, I had moved out of the state in 2011. Since then, I’ve been sending documents back and forth to resolve this, and it’s just taken forever. Sure, everyone I talked to was pleasant, but talking to the same person twice? Almost impossible. It’s just time-consuming.
Since my experience, several others have told me they’ve faced similar issues. It feels like a shake-down where you end up just giving up and hoping they won’t take more of your money.
John Nolte’s first and last novel. borrowed time, winning five star rave from daily readers. You can read an excerpt here and a detailed review here. Also available in hardcover And even more Kindle and audio book.
