Silicon Valley Billionaires Move Out Over California Wealth Tax Plan

Silicon Valley billionaires are leaving California in growing numbers due to a proposed one-time 5% wealth tax on assets over $1 billion. The tax, pushed by a healthcare union, would apply to anyone living in the state as of January 1, 2026, and has already prompted business shifts by figures like Google co-founder Larry Page and Oracle founder Larry Ellison.

Background

California has seen wealthy residents depart for years, drawn by lower taxes in states like Texas and Florida. Now a new ballot measure has sharpened the trend. The Service Employees International Union–United Healthcare Workers West backs the tax to raise funds for healthcare amid federal cuts to programs like Medicaid and ACA subsidies. Organizers aim to collect about $100 billion from around 200 people.

The plan comes as President Trump's policies from last year reduced federal health funding. Union leaders say the money would fill gaps in state services. But tech leaders see it as a direct hit on their wealth, mostly tied up in company shares they do not plan to sell soon.

Moves out of state picked up late last year. Public records show Page's family office, Koop LLC, and his Flu Lab LLC no longer list California addresses. His flying-car project, One Aero, now points to Florida. Ellison sold a San Francisco home for $45 million in an off-market deal, the city's biggest real estate sale of 2025.

Other names in play include investor Peter Thiel, worth $27.5 billion, and Anduril founder Palmer Luckey. Thiel could face a $1.2 billion bill. Luckey has spoken out against the idea. Even with Governor Gavin Newsom opposing it, the measure could hit the November ballot.

Key Details

The tax targets net worth above $1 billion. For someone with $20 billion in assets, that means a $1 billion payment spread over five years. The catch lies in how it values wealth. Founders often hold voting shares in their firms through dual-class stock setups. This gives them control without owning most of the equity.

How It Hits Founders

Take Larry Page. He owns about 3% of Google but controls roughly 30% of its votes. The tax would base his bill on that voting power's value, not liquid holdings. Google's market value runs into hundreds of billions, so his share could trigger a huge payment. A SpaceX alumni building grid tech faces a bill at his firm's early Series B stage that could erase his stake entirely.

Tech investor Allison Huynh, a startup founder and past fundraiser for Barack Obama and Joe Biden, explained the bind.

"You could be a founder worth a hundred billion dollars. But say you only have $2 million in liquid assets because all that money runs your new AI company. Doesn't matter. You're taxed on that $100 billion. So you owe California $5 billion."

Huynh said people she knows have sold homes in days and shopped in Florida, Texas, and Puerto Rico. These include robotics and AI investors who created thousands of jobs.

Palmer Luckey posted on X that the tax would force founders to sell big company chunks for what he called fraud and waste. Bill Ackman, head of Pershing Square, said California heads toward self-destruction, with Hollywood already gone and entrepreneurs next to leave, taking jobs and revenue.

David Gamage, a University of Missouri law professor who helped shape the proposal, said founders overreact. He noted they could use tax lawyers and deferral accounts. California would take its 5% cut when shares sell later.

A separate annual wealth tax idea floats around, at 1-1.5% on assets over $50 million. Huynh called both rage bait to draw voters but warned they speed up exits.

Newsom spoke against the billionaire tax at a New York Times event. He said not to panic but noted wider worries about wealth gaps.

What This Means

If the tax passes, it could reshape Silicon Valley. Founders might move companies too, as seen with SpaceX and Oracle to Texas. Huynh warned of lost investors in AI, healthcare, tech, and robotics, plus jobs. States like Florida and Tennessee stand to gain businesses and employment.

Billionaires already pay heavy income taxes. This adds a wealth layer on unrealized gains. Liquidity issues could force sales, diluting ownership or slowing growth. One founder might pay billions despite low cash on hand.

The retroactive January 1, 2026 date drives urgency. Filings show preemptive shifts. More exits loom if it qualifies for the ballot. California loses not just people but the ideas and firms that built its tech hub status.

Huynh compared it to a failing restaurant hiking prices. She said bad laws push away value creators. Ackman predicted entrepreneurs flee, hitting tax income and jobs. Even opponents like Newsom see broader inequality talks fueling such plans.

Tech leaders weigh risks now. Page's moves signal caution. Ellison's sale points the same way. As ballot fights heat up, the flow out of California grows. States with no income tax draw more appeal. The measure tests if voters back the tax over keeping wealth generators.