A potential new high wealth tax in California has prompted at least six billionaires, including Larry Page and Peter Thiel, to leave the state. Reports suggest that around 20 more billionaires might follow suit.
The six billionaires made their moves before the New Year, with January 1 marking the last chance for Californians to vote in November to avoid a one-time 5% tax on wealth exceeding $1 billion, according to various reports.
David L’Esperance, a tax advisor who specializes in helping wealthy clients relocate from high-tax regions, mentioned that he assisted four billionaires in ending their residency in California just ahead of the deadline.
Divesh Makan, a co-founder of a Silicon Valley investment firm, said he knows of five family members who have already left California.
Some estimates suggest that an additional 15 to 20 billionaire families might exit if voters approve the tax, representing a significant portion of California’s roughly 200 billionaires.
Google co-founder Page reportedly moved to Florida, having purchased a waterfront property in Miami’s Coconut Grove for around $173 million.
He bought a property worth $101.5 million in December and then acquired another mansion nearby for $71.9 million shortly after. This relocation coincided with the establishment of a Florida-based organization linked to his family’s investments.
Thiel, the PayPal co-founder and noted conservative donor, is also increasing his presence in Florida. He announced that his investment firm has opened a Miami office and has registered to vote in Florida, spending more time away from California while still keeping a home in Los Angeles.
Billionaire entrepreneur David Sacks, co-founder of Craft Ventures, moved to Austin, Texas, just before the proposed residency change, planning to have his company operate there by the end of 2025.
Sacks, previously based in San Francisco, didn’t explicitly cite the looming wealth tax as the reason for his move.
In addition, Sergey Brin, another Google co-founder, is reportedly looking to purchase a waterfront house in the Miami area, although no deal has been finalized.
Chamath Palihapitiya, a tech investor, has voiced serious considerations about moving to Texas, expressing that taxes could drive business out of California.
Not all wealthy individuals are considering leaving. Nvidia CEO Jensen Huang has publicly stated he plans to remain in Silicon Valley, expressing confidence about the proposed tax. Meanwhile, John Sobrato, a real estate developer, believes the initiative will fail at the polls, indicating he won’t be relocating.
Supporters of the tax argue it’s necessary to address an impending budget crisis, pointing to a potential $190 billion Medi-Cal funding shortfall over the next decade due to cuts in federal health care funding.
The funds raised would primarily benefit health care, education, and food assistance programs. Advocates assert the tax targets a small group of billionaires whose wealth has substantially increased in recent years, generating significant revenue for public services without heavily impacting their lives.
Some tax advisors caution that the mobility of billionaires makes the proposal risky for California’s economy.
Lesperance noted that billionaires have the ability to relocate and maintain their wealth elsewhere, which underscores the potential consequences of the tax.
