The Golden State is on the brink of a significant fiscal shift, with a proposed billionaire tax set to appear on the November ballot. This measure, targeting the state’s wealthiest residents, has ignited a fierce debate and prompted strategic maneuvers among California‘s elite.
The proposed tax, which would impose a one-time 5% levy on the net worth of individuals with assets exceeding $1 billion, has garnered substantial support from progressive advocates. However, it has also faced staunch opposition from Governor Gavin Newsom and other influential figures, who argue that the tax could drive away the state’s wealthiest residents and harm its long-term economic prospects.
The Billionaire Tax: A Clash of Ideals
The proposed tax is backed by the Service Employees International Union-United Healthcare Workers West which has collected over 1.5 million signatures in support of the measure. Proponents argue that the tax is necessary to offset federal spending cuts and fund vital sectors such as healthcare, education, and food assistance.
“Enthusiasm for the billionaire tax is unlike anything we have seen before,” said Debru Carthan, the vice president of the union sponsoring the bill. “The billionaire tax will be on the November ballot and we intend to win.”
However, opponents of the measure, including Governor Newsom and a group of Silicon Valley tech giants, argue that it will hurt California’s economy by driving out its billionaire residents. They contend that the tax could lead to a brain drain and a reduction in the state’s tax base, ultimately harming its long-term economic prospects.
Billionaires Bracing for Impact
Advisors to the ultra-wealthy say their clients are already bracing themselves for the wealth tax, and that billionaires are making moves out of California regardless of the outcome of the ballot measure.
“The cat’s out of the bag,” said David Lesperance, a lawyer who advises the ultra-wealthy on immigration, citizenship, and taxes. Lesperance noted that several high-profile billionaires, including Google cofounders Sergey Brin and Larry Page, have already taken steps to reduce their California ties ahead of the January 1, 2026, deadline.
Michael Cole, managing partner at R360, an exclusive, invite-only club for ultra-high-net-worth families, said the ultra-wealthy have long felt burned by California and that many of them have already migrated out of the state. He called the wealth tax “another example of people feeling like California is at the leading edge of undue tax onto those that succeed.”
Legal Challenges and Uncertainty
If the measure passes, legal challenges are widely expected. Some argue that the tax’s constitutionality is questionable, particularly due to its retroactive application and the method used to determine an individual’s net worth.
Kristin Yokomoto, a private wealth and family office services attorney, said some of those arguments could be about due process, the retroactive application of the tax, and the nature of the tax being applied to net worth rather than income. She noted that there are cases of founders whose assets may total over $1 billion but are almost entirely tied up in stock, adding they could “have to pay $50 million of cash when the value of the company has never been realized yet.”
Governor Newsom, who has long opposed the tax, has advocated instead for a federal wealth tax—one that would be harder for billionaires to evade by leaving the state. While passing a federal wealth tax is still unlikely at this stage, Lesperance said it’s already on the radar of his clients, whom he helps assess their best options for pursuing citizenship abroad.
Proponents of the tax argue that it is necessary to offset federal funding cuts and fund vital sectors such as healthcare. However, some left-leaning opponents, including healthcare and labor groups that generally support raising taxes on the wealthy, have argued that the proposed measure is not a sustainable, long-term solution.
