A proposed tax for California’s wealthiest has led to a political uproar with tech titans threatening to leave the state. California has more billionaires than any other state a few hundreds, according to some estimates. Nearly half its personal income tax revenue, a financial backbone in the nearly $350 billion budget, comes from the top 1% of earners.
Under the tax proposal, individuals with assets exceeding $1 billion would be required to pay a 5% tax on the value of their holdings above that threshold. The tax is designed to raise revenue for state programs, including housing, education, and healthcare, by targeting the largest fortunes in California. Supporters argue that the tax would help address inequality and generate funds for pressing social needs without burdening the majority of residents. Critics, however, warn that it could drive high-net-worth individuals to relocate or restructure their assets to avoid taxation, potentially reducing investment in the state.
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It is not clear if the proposal will make the ballot, with more than 870,000 petition signatures required for it to qualify.
This plan has led to competing interests and reactions at a time when both Democrats and Republicans are struggling to respond to economic anxiety driven by rising costs ahead of this year’s midterm elections.
A number of tech leaders are opposed to this proposal, with PayPal leader Peter Thiel, a founder of PayPal, contributing $3 million to a committee tied to a business group opposing the tax.
Google founders Sergey Brin and Larry Page have also been reportedly planning to leave California, with a filing revealing that T-Rex LLC, formed in 2006 and linked to Brin and Page, converted out of California into a Delaware LLC called T-Rex Holdings on Dec. 24, 2025.
“You are really playing with fire with this one,” said Aaron Levie, CEO of the publicly traded Silicon Valley company Box. He fears that the proposed tax would drive entrepreneurs to look elsewhere to run their companies and launch startups. Even liberal-leaning tech pioneers would “find it absurd just on pure economic and structural grounds, even if they might agree that the cause itself is very worthy,” said Levie, who is not a billionaire.
Democratic Gov. Gavin Newsom has long opposed state-level wealth taxes, believing such levies would be disadvantageous for the world’s fourth-largest economy. Some analysts have also issued warnings about an “exodus of billionaires,” which could mean a loss of hundreds of millions of tax dollars.
Meanwhile others have come out in support of the tax. “Our nation will not thrive when so few have so much while so many have so little,” Sanders said on the social platform X.
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Another supporter, and a potential 2028 Newsom rival, is Democratic Rep. Ro Khanna, who criticized billionaires for threatening to flee over a tax intended to provide health care for lower-income people.
The measure’s lead proponent, the Service Employees International Union, sees the threat of an exodus as exaggerated. The tax is a “workable response to a crisis created by Congress,” Suzanne Jimenez, chief of staff of SEIU-United Healthcare Workers West, said in a statement. She added that it would “keep emergency rooms open, hospitals staffed and health care systems functioning.”