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Billionaires are following Elon Musk out of California · Elon Musk Podcast

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  Larry Page, who's the Co founder of Google, has discussed leaving
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  California by the end of this year.
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  Peter Thiel, the venture capitalist who Co founded P Pal
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  and Palantir, is exploring moving his investment firm to
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  another state. Both men are responding to the
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  same thing. A proposed ballot measure that
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  would tax California billionaires 5% of their total
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  wealth. It's not 5% of their income.
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  That's 5% of everything that they own.
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  For Page, whose net worth is estimated at $250 billion, the
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  tax bill could exceed 12 billion.
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  For teal, worth around 27.5 billion, the bill would top $1.2
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  billion. The measure has not even
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  qualified for the ballot yet, and billionaires are already
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  filing paperwork to incorporate in Florida.
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  And what happens when a state tries to tax the people who can
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  most easily leave? They have the resources.
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  They can do whatever they want. And the answer involves a
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  healthcare union, federal budget cuts, a Christmas party themed
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  around the American Revolution and a debate that has tech
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  founders calling this an organized seizure of private
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  property. The measure could raise $100
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  billion from about 200 people. Governor Gavin Newsom has
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  already come out against it. So have some of the most
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  prominent names in Silicon Valley, and we'll get right into
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  that after this very short break.
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  California is home to more billionaires than any other
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  state in the country, about 200 to 250 of them, depending on how
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  you count them and the proposed tax targets.
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  All of them. In October of 2025, the
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  healthcare Workers Union called SEIU United Healthcare Workers W
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  filed paperwork to place the California Billionaire Tax Act
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  on the November 2026 ballot. Now the union says federal
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  health care cuts under the One Big Beautiful Bill Act will
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  strip roughly $100 billion from California healthcare over the
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  next five years. Now the wealth tax is their
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  answer to that. They're going to get that money
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  back. The mechanics are very
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  straightforward. Any California resident with a
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  net worth exceeding a billion dollars would pay a one time tax
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  equal to 5% of their total. Assets included stocks, bonds,
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  business interests, intellectual property, artwork, anything of
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  value except real estate held directly, pensions in retirement
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  accounts up to $10 million. The tax would apply to wealth
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  held as of December 31st, 2026. And the catch is residency.
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  If you were a California resident on January 1st, 2026,
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  you owe the tax even if you leave before the measure passes.
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  That makes this retroactive. The ballot initiative would not
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  be voted on until November of 2026, and by then the residency
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  cut off would already be about 10 months in the past.
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  Now. The retroactive structure is why
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  some billionaires are moving right now, not waiting to see if
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  the measure qualifies or passes. In mid-december, 3 limited
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  liability companies associated with Larry Page filed documents
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  to incorporate in Florida. It's a standard early step for
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  someone establishing residency in a new state.
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  Page has been a long time residence of Palo Alto.
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  Peter Thiel owns a home in the Hollywood Hills and runs Thiel
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  Capital out of LA. According to the New York Times,
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  He has explored opening an office at another state and
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  spending more time outside of California.
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  And earlier this month, Peter Thiel hosted a Christmas party
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  at his Hollywood Hills mansion. The theme was all things
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  Britain, the country American revolutionaries revolted against
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  in 1975. Axor After Taxation Now guests
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  reportedly discussed the implications of the proposed
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  ballot measure at that party. Now, the union backing the
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  measure says the revenue was split 90% to healthcare programs
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  and 10% to K through 12 education and food assistance.
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  Dave Reagan, president of SEIUUHW, has framed the tax as
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  an emergency response. Without action, he says,
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  millions of people will lose healthcare, an untold number
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  will go without treatment, and there will be tragedy after
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  tragedy after tragedy. And the union argues that
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  California's billionaires built their wealth using the
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  advantages of California, its universities, its talent pool,
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  its infrastructure, and should help fund services when federal
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  money disappears. Now post posters on X say the
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  measure will eventually bankrupt all of California.
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  And that was Chamath Palahapitia.
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  I was a tech investor and former Facebook executive.
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  It's predictable but also precise.
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  If you get the billionaires out of there, what you know, what
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  happens to their money, it goes with them, right?
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  The most talented entrepreneurs can and will leave the state,
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  and they'll leave for states that do not tax wealth.
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  And when they leave, they take their income taxes with them.
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  They take their homes with them. All the money that they spend in
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  that state goes with them. It goes to another state,
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  Florida, possibly California's top 1% already pay more than
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  half the state's income tax revenue.
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  And who pays that after they go? Palmer Luckey, the founder of
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  Audrill and one of the most vocal critics, raise a different
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  problem. The tax applies to paper wealth,
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  not actual cash. Lucky sold his first company,
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  Oculus, to Facebook for $2 billion.
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  He paid hundreds of millions in taxes on that sale.
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  He then used the remainder to start Andrill, a defense
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  technology company that now employs 6000 people.
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  His stake in Andrill is worth billions on paper, but he can't
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  spend that money. He can't sell large chunks
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  without disrupting the company or triggering capital gains
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  taxes, and under the proposed tax he would owe billions in
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  cash based on the value of shares he cannot easily
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  liquidate. And if he can't pay, the state
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  could seize his home and garnish his wages, which is crazy. 1
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  market correction, one nationalization event, one
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  prohibition of divestiture and I'm screwed for life.
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  He posted. That's his phrasing, not mine.
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  Dylan Field, who's the Co founder and CEO of Figma,
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  pointed out that founders and early employees could get caught
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  up in the tax without the ability to use company stock to
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  pay for it. Start up compensation often
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  consists of equity and companies that have not gone public.
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  I've been part of that. When you start a company with
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  somebody or when you are part of the founding team, If you we
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  founded a company with about 5 people and you get early equity,
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  right? You get shares in the company
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  before it goes public and you don't get any money for those
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  shares. You actually buy into them
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  sometimes and you have to pay money for those shares instead
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  of just give being given them if that wasn't part of your deal,
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  right? So sometimes people buy $10,000
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  worth of shares because they believe so much in this company
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  and they want to make it happen and you know what?
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  They can't use those shares because the company isn't worth
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  anything yet right before the IPO.
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  They can't convert it to cash until an IPO or an acquisition.
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  Now, the proposed tax would treat that equity as taxable
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  wealth anyway, so you can't. I mean, you're going to go
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  bankrupt. And if the company later has a
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  down year, the founder might be forced to lower the company's
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  valuation through a down round just to meet the tax
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  application. OK, so Dave Friedberg, Co
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  founder of Ohalo Genetics, called the measure and organized
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  government seizure of private property from citizens who have
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  already paid other state taxes that can total 53% in
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  California. He compared it to politics in
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  the Soviet Union, Cuba, Venezuela, France and Norway.
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  Now the political response has been very predictable.
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  RO Khanna, who's a Democrat, represents part of Silicon
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  Valley flag The New York Times story about Page and teal
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  potentially leaving. He added a line echoing
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  President Franklin Roosevelt said I will miss them very much,
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  kind of said he opposes taxes on unrealized gains and supports
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  workarounds for founders with illiquid assets.
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  But he defended the broader principle.
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  Tax dollars helped build the AI industry, he wrote, and we
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  cannot have a nation with extreme concentration of wealth
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  in a few places. But where 70% of Americans
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  believe the American dream is dead and healthcare, childcare,
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  housing and education are unaffordable for most people.
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  His argument is the innovation will not be stifled by a tax.
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  Wealth, political dysfunction and social unrest definitely
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  will. But that's the divide. 1 side
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  sees the taxes theft, the other sees concentrated wealth as a
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  theft to social stability. Neither sides moving on this,
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  they're staying focused. Governor Gavin Newsom has
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  opposed this measure. So has the California Taxpayers
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  Association, which warned that the tax would chase high income
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  residents out of the state and faces serious legal challenges.
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  The Legislative Analyst's Office, California's nonpartisan
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  fiscal advisor, confirmed the legal uncertainty.
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  The measure could violate the dormant Commerce Clause of the
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  United States Constitution because it taxes worldwide
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  assets. It could violate due process
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  protections because it is retroactive.
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  It could be classified as a property tax, which California
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  restricts under Article 13 of its constitution.
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  California Taxpayers Association estimated that a previous
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  smaller wealth tax proposal would cost 200 to $300 million
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  annually just for administration.
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  Now the current initiative allocates only 15,000,000 for
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  administration. And, of course, strike down the
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  measure after it passes. The state would have spent years
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  litigating tax it cannot collect.
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  Now. The backdrop is income
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  inequality that has grown stark. Congressional Budget Office data
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  shows that the share of wealth held by families in the top 10%
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  is around 69%. The share held by families in
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  the bottom 50% is 3%. That gap has widened over 33
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  years. The billionaires threatening to
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  leave California did not create that gap alone, but they
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  represent its most viable edge now.
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  Companies have already been leaving California for states
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  with lower taxes and fewer regulations.
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  Elon Musk moved Tesla and SpaceX to Texas.
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  New data centers in the AI infrastructure being built
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  outside of California, where land, water and electricity are
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  more more available and cheaper, and the wealth tax could
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  accelerate that trend. Gary Tan, CEO of Y Combinator,
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  told the New York Post Post that the measure would cause a
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  Stampede of unicorns out of California.
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  Other states would reap the benefits of entrepreneurs,
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  technology, and the jobs that California enjoys now.
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  Now, the measure still needs about 875,000 valid signatures
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  to qualify for the November 2026 ballot.
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  Signature gathering is expected to begin in early 2026, and if
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  it qualifies, it requires only a simple majority to pass.
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  You need internal polling suggests strong voter support,
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  though SEIUUHW has not really specific numbers.
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  And the question is whether voters will see this as a fair
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  ask of people who can afford it, or is the first step toward a
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  broader wealth tax that reaches further down the income ladder.
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  Robert Reich, former labor secretary under Bill Clinton,
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  has endorsed the measure as a wealth tax that will work.
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  Bill Ackman, the hedge fund manager, warned that California
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  is on a path to self destruction.
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  Hollywood has already toast, he wrote, and now the most
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  productive entrepreneurs will leave, taking their tax revenues
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  and job creation elsewhere. The vote's eleven months away.
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  Some billionaires are not waiting to see how it turns out.
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