The proposed billionaire tax has caussed $1 trillion in potential tax revenue to flee California. The billionaire tax would require California residents worth over $1 billion to pay a one-time 5% fee on all assets, including unrealized gains.
Google co-founder Larry Page fled the state and took his $276 billion net worth with him. Page moved his family office, Koop LLC, from California to Delaware and began purchasing property in Florida at the end of 2025. Oracle co-founder Larry Ellison, worth around $245 billion, sold his home in San Francisco in favor of Hawaii. Venture capitalist Peter Thiel cut ties with California, taking his $26 billion and counting, opting to relocate in Miami. Craft Ventures co-founder David Sacks fled California and opened an office in Austin, Texas. Sacks wrote on social media that “Miami will replace NYC as the finance capital and Austin will replace SF (San Francisco) as the tech capital.”
Venture capitalist Chamath Palihapitiya believes California has lost $1 trillion in billionaire wealth because 50% of billionaire-driven potential tax revenue has left the state. Even if the bill does not pass, the fact that it was proposed and highly considered has unsettled capital and smart money will not remain where it is not welcome.
California heavily relies on top-earners to cover budget deficits. Last January, the Legislative Analyst’s Office (LAO) found that California is facing “double-digit operating deficits in the years to come” as a result of reckless government spending. For the 2025-26 period, the LOA believes the state may have a balanced budget, but calls Newsom’s spending and policies highly unpredictable.
GOVERNMENT SPENDING is to blame for the budget failures. Every analysis says the same thing. The LAO suggests: “Legislature would need to address in the coming years, for example, by reducing spending, increasing taxes, shifting costs, or using more reserves. The magnitude of these deficits also indicates that, without other changes to spending or revenues, the state does not have capacity for new commitments.”
California was banking on billionaires to cover 90% of the state’s health care costs. The 2025-26 budget allocated $188.1 billion in total ($42.1 billion General Fund) to Medi-Cal, representing a steep $4.5 billion General Fund increase from the previous year. Medi-Cal is expected to expand to $222.4 billion in FY2026-27. Administration costs alone account for nearly 17% of health spending, with costs increasing by 23% in 2023 alone. The state was expecting the billionaires’ tax to cover $22.5 billion in annual healthcare program costs. The funds have left the state and will not return.
The state was also planning to redirect $2.5 billion from billionaires’ annual contributions to food and education assistance programs. Governments will never understand that they cannot rob Peter to pay Paul without repercussions. Again, the proposal alone was enough to uproot capital, businesses, jobs, development, and innovation.