California Billionaires Split Over Proposed Wealth Tax

A proposed wealth tax in California has evoked split responses from the state's resident billionaires, revealing a divide in financial risk tolerance. The proposal suggests a one-time 5% tax on assets held in the state during the 2026 tax year.

Reactions among tech industry leaders have varied significantly. Google co-founder Larry Page moved assets out of California ahead of the January 1, 2026 deadline to avoid the tax. Conversely, Nvidia CEO Jensen Huang stated he is 'perfectly fine' with the tax and has not considered moving his assets.

Financial expert Don Hilario characterizes these divergent paths as a 'fight-or-flight' response to uncertainty. The proposal, initiated by the union SEIU-United Healthcare Workers West, aims to offset potential budget cuts to healthcare and education. However, it faces significant hurdles, requiring 870,000 signatures to reach the November 2026 ballot. Other billionaires, including LinkedIn's Reid Hoffman, have criticized the tax, warning that poorly designed taxes incentivize avoidance and capital flight.

The introduction of a proposed wealth tax in California has forced the state's wealthiest residents to evaluate their commitment to residency. The tax, as proposed, would apply to assets in the state during the 2026 tax year, creating immediate pressure for those with significant holdings.

Responses from key figures in the technology sector illustrate a clear split in strategy. Larry Page took proactive measures to mitigate potential financial impact. Reports indicate that the Google co-founder moved some of his assets out of California before the January 1, 2026 deadline specifically to avoid facing the tax.

In stark contrast, Jensen Huang of Nvidia adopted a stance of acceptance. Huang told Bloomberg TV's Ed Ludlow, "We chose to live in Silicon Valley, and whatever taxes they would like to apply, so be it." He added, "I'm perfectly fine with it," noting that he had "not even thought about it once."

These opposing reactions highlight the different ways wealthy individuals balance financial risk in the face of regulatory uncertainty. While Page sought control through relocation, Huang demonstrated a willingness to endure the potential tax burden.

Don Hilario, a Certified Financial Planner professional working with clients in California, analyzes these reactions through the lens of risk tolerance. Hilario suggests that the lingering uncertainty surrounding the tax triggers a fundamental need for certainty and autonomy among high-net-worth individuals.

Hilario draws a parallel between the tax decision and a classic 'fight-or-flight' response, albeit with a billionaire's twist. He categorizes the behaviors as follows:

• The 'Larry Page Route': Individuals who seek a greater sense of control by taking early action to avoid the tax.
• The 'Jensen Huang Route': Individuals with the temperament to endure uncertainty and accept the tax as a cost of residency.

To illustrate the emotional dynamics at play, Hilario described a hypothetical scenario involving a high-net-worth individual considering a home purchase during a period of economic uncertainty. The decision mirrors the tax dilemma: do you commit resources now to secure a position, or do you wait to see how conditions evolve? Hilario noted, "That's the same type of emotions that exist with this tax bill because the fear of not taking any action is unsettling."

Ultimately, Hilario believes the uncertainty forces investors to be more cautious and defensive. Whether taking early action or enduring, the goal is to gather information and avoid irreversible decisions.

The wealth tax proposal was put forth by the union SEIU-United Healthcare Workers West. The union argues that the concentration of billionaire wealth in California makes the state "uniquely positioned to address both the well-documented crisis of wealth inequality in the United States and the emerging and interrelated crises the state faces." The revenue is intended to offset potential budget cuts to healthcare and education.

However, the proposal is far from becoming law. It requires 870,000 signatures to qualify for the November 2026 ballot.

Criticism of the tax extends beyond those choosing to move assets. Reid Hoffman, the co-founder of LinkedIn, publicly criticized the proposal on X (formerly Twitter), describing it as having "massive flaws." Hoffman argued, "Poorly designed taxes incentivize avoidance, capital flight, and distortions that ultimately raise less revenue."

Legal representatives of the wealthy have also weighed in. Attorney Alex Spiro, who has previously represented billionaires, sent a letter to California Governor Gavin Newsom stating that his clients would "permanently relocate" if the tax were to become law.

The proposed wealth tax continues to generate debate regarding its viability and potential economic impact. The significant uncertainty surrounding the proposal—specifically regarding how assets will be valued and whether the tax structure will change—remains the primary driver of billionaire decision-making.

As Hilario stated, "I still think ultimately it's unclear. And I think when it's unclear, it'll make people, in this case, investors, be more cautious and defensive." The coming months leading up to the signature deadline and potential ballot measure will likely determine if the 'fight' or 'flight' response becomes the dominant strategy among California's wealthiest residents.