California Billionaires Face Proposed Wealth Tax

California is considering a significant fiscal change targeting its wealthiest residents. A new proposal suggests a one-time 5% tax on the assets of individuals worth over $1 billion. This measure aims to close a projected multibillion-dollar state budget deficit.

The plan has triggered a range of responses from the state's business elite. While some leaders remain indifferent, others have taken immediate action to restructure their holdings. The timing of these financial maneuvers is critical due to the potential retroactive application of the tax.

Key developments include:

• Google cofounders moving entities out of California.
• Mixed reactions from tech CEOs regarding the tax's validity.
• Concerns raised about the impact on innovation and capital.

California's fiscal landscape faces a potential overhaul with a proposal targeting the state's billionaires. The plan introduces a one-time 5% tax on the assets of residents with a net worth exceeding $1 billion. This initiative is designed to address a projected multibillion-dollar deficit in the state budget.

The proposal has generated significant discussion among the wealthy elite. If approved by voters in November, the tax would take effect retroactively for residents living in California as of January 1, 2026. This retroactive clause has created a sense of urgency for high-net-worth individuals regarding their asset locations.

In response to the proposed legislation, some of the world's wealthiest individuals have begun moving assets out of the state. Larry Page, cofounder of Google, converted his secretive family office out of California in late December. He incorporated the office in Delaware to avoid potential tax liabilities.

Page has also incorporated other entities in Delaware recently. These include a vehicle used to fund influenza research and another for his flying car ventures. He lists principal office addresses outside of California for these entities. Separately, an entity tied to both Page and fellow cofounder Sergey Brin moved out of California at the end of 2025.

According to the Bloomberg Billionaires Index, Brin and Page possess a combined net worth of over half a trillion dollars. The strategic timing of these moves suggests an effort to shield assets from the retroactive tax should the measure pass.

The proposed tax has highlighted a divide among Silicon Valley executives regarding fiscal policy and innovation. Jensen Huang, CEO of Nvidia, expressed a willingness to accept the tax. He stated he is "perfectly fine" with the levy and gave no indication he plans to leave the area, even if it costs him personally.

Other prominent figures have voiced strong opposition. Reid Hoffman, cofounder of LinkedIn, described the proposal as "horrendous" for innovation. He warned that poorly designed wealth taxes do not raise reliable revenue; instead, they push money and talent to other locations.

Alex Spiro, a celebrity lawyer representing several billionaires, sent a letter to Governor Gavin Newsom last month. The letter warned that the tax would drive capital and innovation out of California. Furthermore, White House AI Czar David Sacks predicted that Austin would overtake San Francisco as the American tech hub, a sentiment that has sparked debate within venture circles.

The proposed wealth tax in California represents a critical juncture for the state's relationship with its business community. While the measure seeks to stabilize the state's finances, it risks alienating the billionaires who drive much of the local economy. The immediate movement of assets by figures like Larry Page and Sergey Brin signals potential long-term consequences if the tax is enacted.

As the November vote approaches, the debate will likely intensify. The contrast between leaders like Jensen Huang, who accept the tax, and those like Reid Hoffman, who fear for the state's innovative capacity, sets the stage for a complex political battle. The outcome will determine not only the state's budget future but also the geographic distribution of wealth and talent in the technology sector.