Billionaire Tax Act rattles the Golden State

Billionaires have been fleeing California because of a ballot measure seeking to impose a one-time tax of 5% on their wealth. Promoted by unions, endorsed by Sen. Bernie Sanders, D-Vt., and doing well in gathering signatures to be on the November ballot, this citizen-initiated ballot measure is supported by 50% of voters plus another 14% who are undecided but lean “yes,” according to an early poll.

This Billionaire Tax Act would be retroactive to Jan. 1, 2026, and many billionaires are not waiting around for the election results. Mark Zuckerberg, one of the top five wealthiest persons in the world and founder of Facebook, which is headquartered in California, has reportedly already decided to move to Florida, where there is not even an income or estate tax.

Google co-founders Sergey Brin and Larry Page, venture capitalist David Sacks and Uber co-founder Travis Kalanick have also reportedly moved out of California. There are more than 200 billionaires in California, the most of any state, and their total wealth exceeds $2 trillion.

Wealth, including unrealized capital gains on stock ownership, has never been taxed before. But the California ballot measure would both revise its state constitution and enact a new law imposing this tax, which could have cost Zuckerberg more than $10 billion dollars had he remained a resident of California.

California has the largest homeless population of any state, totalling nearly 200,000 people, and 50% of our country’s unsheltered population lives in California. It is projected to have a budget deficit of $18 billion this year, and then have future annual deficits of $20 to $35 billion.

This red ink cannot flow forever, and states are not allowed to file for bankruptcy. Unlike the federal government, California cannot print its own money to pay off its debts.

Suddenly, there is a sharp uptick of interest in super-luxury homes in Wyoming, reports the New York Post, with the explanation that more California billionaires are looking to flee to that mostly tax-free state. Several centibillionaires, including Elon Musk and Oracle’s Larry Ellison, previously left California; Musk moved to Texas, and Ellison moved to a Hawaiian island that he purchased.

Roughly 20 states allow citizen-initiated ballot measures, as California does. Over the years other ballot measures, like raising the minimum wage, were enacted by landslide margins in California and Oregon and then spread to many other states in imitation.

One of the easiest states to place a new law on the ballot for majority vote is Colorado, where liberals have run up a $1.5 billion annual deficit that is forcing cuts in programs and which could impact Medicaid services for the poor. Half the states face budget shortfalls as federal funding for them dries up.

Democrat-controlled legislatures in blue states like New York and New Jersey, which lack a process for citizen-initiated ballot measures, can put wealth taxes up for a vote by the people. Wealthy individuals can also flee from these states to low-tax alternatives like Florida, Texas and Wyoming.

Backers of the California billionaire tax predict that it will raise $100 billion, of which 90% would be allocated to public health services. The remaining 10% would go toward education and food assistance programs.

Public health services in California include coverage for costly transgender operations and treatments. The California Medicaid program, known as Medi-Cal, requires coverage of this and prohibits any discrimination based on transgender issues.

Billionaires are donating money to try to defeat this ballot measure in California, and usually the side that spends the most is the side that prevails. Already $35 million has been pledged or donated by billionaires against this.

But the retroactive effect of this billionaire tax is designed to prevent anyone from escaping its bite by moving shortly before or after the election. Someone worth $10 billion would be taking a $500 million risk by staying in California while hoping to defeat this ballot measure by popular vote.

It appears that many Big Tech billionaires are not big fans of direct democracy after all. Common expressions like “the people have spoken” or “pro-democracy” are not how they really feel when it comes to holding onto their own wealth, which in most cases is from gains in the stock market during deficit-spending by the federal government.

California Gov. Gavin Newsom, who aspires to become the people’s president, is against this billionaire’s tax. It does not look like Bernie Sanders or most progressives will be endorsing Newsom in light of his position.

A permanent national income tax did not exist until the 16th Amendment was added to the U.S. Constitution in 1913. As with proposals for a wealth tax, the original federal income tax was imposed only on the richest Americans, but then inevitably expanded to tax most workers.