California’s Proposed 5% Wealth Tax on Billionaires Unites—and Divides—Silicon Valley’s Elite
- What’s the Proposed Wealth Tax All About?
- Why Are Tech Billionaires Freaking Out?
- Who’s Already Voting With Their Feet?
- Could There Be a Compromise?
- The Human Cost vs. The Greater Good
- What’s Next for the Golden State?
- FAQs About California’s Billionaire Wealth Tax
In a MOVE that’s sparked fierce debate, California is considering a one-time 5% wealth tax on individuals with assets exceeding $1 billion. The proposal, which could affect around 200 ultra-wealthy residents and generate an estimated $100 billion for the state, has Silicon Valley’s tech moguls buzzing—and some already packing their bags for tax-friendlier states like Florida and Texas. Here’s what you need to know about the controversial plan and why it’s causing such a stir.
What’s the Proposed Wealth Tax All About?
The tax, introduced in October by the Service Employees International Union-United Healthcare Workers West, WOULD apply globally to all assets—including publicly and privately held company stock, art collections, and other high-value holdings (with exceptions for certain retirement accounts and real estate). If approved by voters in November, it would take effect retroactively for anyone residing in California as of January 1, 2026.
Why Are Tech Billionaires Freaking Out?
Dozens of executives have been privately discussing the measure in a Signal group chat ominously titled “Save California.” Participants include defense tech entrepreneur Palmer Luckey, crypto policy advisor David Sacks, and Ripple co-founder Chris Larsen—some of whom have called the proposal “communism” while others criticize its lack of implementation details.
Their main concerns? That it might:
- Force founders to sell hard-to-liquidate assets
- Trigger an exodus of talent and capital from Silicon Valley
- Stifle job creation and economic growth
Who’s Already Voting With Their Feet?
The threat isn’t just theoretical. Peter Thiel’s investment firm recently signed papers for Miami offices, Google co-founders Larry Page and Sergey Brin are house-hunting in Florida (with Page dropping $173.4 million on waterfront properties), and Y Combinator’s Garry Tan hinted at expanding to Austin or Cambridge if the tax passes.
Could There Be a Compromise?
Representative Ro Khanna (whose district includes Silicon Valley) suggests tweaking the proposal to protect illiquid assets and voting shares. Tax experts like University of Missouri’s David Gamage note billionaires could borrow against assets or defer payments rather than selling. Alternative ideas floating around include:
| Proposal | Description |
|---|---|
| 10-Year Government Notes | Allow payment via interest-free/low-interest loans of government stock |
| Asset-Backed Loan Tax | Tax loans secured by high-value assets |
| Public Stock Only | Limit taxation to publicly traded shares |
The Human Cost vs. The Greater Good
Union leader Debru Carthan frames it starkly: “We’re just trying to keep ERs open and save lives... those leaving have shown the world their unchecked greed.” Meanwhile, supporters argue:
- California’s billionaires would remain among the world’s wealthiest post-tax
- The 5% rate is modest compared to their 7.5% average annual wealth growth
- Funds could offset healthcare cuts from Trump-era tax reforms
What’s Next for the Golden State?
With signature gathering underway and compromise talks scheduled, all eyes are on whether California can balance progressive taxation with maintaining its innovation ecosystem. As San Francisco accountant Richard Pon (a rare Republican supporter) puts it: “This’ll never affect me—I won’t be a billionaire.” But for those it would affect, the stakes couldn’t be higher.
FAQs About California’s Billionaire Wealth Tax
Who proposed the 5% wealth tax?
The Service Employees International Union-United Healthcare Workers West introduced the proposal in October as a way to fund healthcare services.
How many people would this affect?
Approximately 200 California residents with assets exceeding $1 billion.
What assets would be taxed?
All global assets except certain retirement accounts and real estate—including private and public company stock, art, etc.
When would it take effect?
If passed, retroactively to January 1, 2026 for California residents at that time.
Are there alternatives being considered?
Yes, including taxing only publicly traded stock, allowing asset-backed loan payments, or accepting government notes as payment.
