California’s proposed wealth tax hasn’t technically made it onto the ballot yet, and already the state’s three wealthiest taxpayers have publicly announced their departures. With just these three relocations, 38 percent of California’s billionaire wealth walked out the door, according to a new analysis of the tax I authored for the California Tax Foundation.
Proponents and critics of the 2026 California Billionaire Tax Act have debated how much the one-time, 5 percent wealth tax would raise, and whether fleeing billionaires will be able to avoid paying it. But an equally important question has received less attention: What happens to California’s other tax revenues when billionaires depart in response to the tax? As I show in the report, the Golden State stands to lose nearly as much as $4.5 billion per year from billionaire flight, quickly offsetting any fiscal benefit the one-time wealth tax might bring.
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Eight California billionaires have reportedly already left the state: Larry Page, Sergey Brin, Mark Zuckerberg, Peter Thiel, Don Hankey, David Sacks, Jan Koum, Andy Fang, and Travis Kalanick. Real estate transactions by Steve Jurvetson and others have also prompted speculation. Other billionaires have almost certainly quietly relocated, and more are likely to follow.
Whether these exiles will succeed in avoiding some or all of the wealth tax is a matter of robust debate. The initiative uses a January 1, 2026, snapshot in an attempt to obligate billionaires before they can depart. The initiative’s residency provisions raise significant legal questions, however, and courts could revise or invalidate them, meaning billionaires have cause to believe that a departure sometime this year could spare them from wealth-tax liability.
For California’s revenue from other taxes, the outcome of that debate is largely irrelevant. What matters is that billionaires depart and eventually establish domicile elsewhere, taking their income and spending with them.
California’s tax code relies heavily on high-income taxpayers. Households with more than $5 million in annual income account for about 0.06 percent of filers but pay about 21 percent of income taxes. The state’s more than 200 billionaires are, unsurprisingly, particularly vital.
What would be the effect of these residents leaving? In my analysis, I model likely billionaire departures and estimate that California’s revenue loss runs between $3.53 billion and $4.49 billion per year. Those losses come out of the state’s income, sales, and other taxes. Even if zero billionaires left the state beyond the eight already publicly identified, California would face a revenue loss of $2.77 billion per year.
I classify each California billionaire by his primary source of wealth: public founder equity, private operating business, financial fund management, and mixed/diversified holdings. These groups differ on three important dimensions: their mobility, how much of their income would still be sourced to California after departure, and the intensity of employment and investment spillover if they relocate. After estimating wealth-tax flight across the four billionaire classifications, I calculate income tax liabilities and apply the existing wealth tax literature to estimate spillover effects, as departures reduce consumption and lead to employee relocations.
Because founders of publicly traded companies are highly mobile, and because most of their income derives from capital gains, they retain almost no California-source income after relocating. At the same time, their departures produce little employment spillover, because their company’s operations are not tied to them personally. Conversely, the owner of a private business with significant operations in California may find it harder to leave, but if he does relocate, he will bring more of the firm’s operations—and, consequently, employees and suppliers—with him.
Unfortunately for California, 48 percent of California’s billionaires are tech-sector founders, and they hold 73 percent of the state’s billionaire wealth. Founders’ high mobility explains why billionaires like Page, Brin, Zuckerberg, and others could announce their exits so quickly. This is bad news for the Golden State: those who can most easily leave are also those with the greatest wealth.
My modeling approach was quite conservative. My assumptions are based on European wealth taxes, though California’s proposed tax is more aggressive than its European precursors. Crossing state lines is also far easier than relocating across national borders.
The model can tell us how much California stands to lose when its billionaires leave, but it cannot account for how a wealth tax will influence the decision-making of future startup founders who shun California for fear of future wealth taxes. The tax currently on the ballot is a one-time levy, but many reasonably believe that California won’t give up that revenue easily, especially if proceeds from other charges decline due to the wealth tax.
The wealth tax would provide a temporary revenue infusion, though collections could disappoint if some of the state’s wealthiest residents succeed in avoiding it. In the long run, however, the revenue losses from a billionaire exodus would dwarf the initial gains, and the chilling effect on future investment could haunt the state for years to come.