When Bloomberg asked Nvidia CEO Jensen Huang whether a proposed California “billionaire tax” would make him pack up and leave, his answer was simple: he was “perfectly fine” with it. That short line has become a flashpoint in a much bigger fight — one that mixes money, politics and the new fortunes being minted by artificial intelligence.
California’s proposal would impose a one-time, 5% levy on anyone whose net worth exceeds $1 billion, with a look-back that designates residents as of Jan. 1, 2026. Backers, led by the Service Employees International Union–United Healthcare Workers West, say the measure could raise roughly $100 billion for education, health care and food assistance. Opponents call it punitive, unconstitutional and a threat to the state’s competitiveness.
A tax that bites now
What makes this initiative unusual is its retroactive trigger date. Instead of taking effect only after voters approve it in November, the proposal targets people who were California residents on Jan. 1, 2026 — effectively narrowing the window for anyone to change tax residency before the measure is voted on. That’s the part that has legal experts and advisers warning of litigation and high-stakes maneuvers.
California doesn’t determine residency the same way New York does. Attorneys point to the state’s “closest connection” framework, which looks at a web of ties — where you live, work, where family and personal items are located, and social connections — to determine whether someone remains a California resident. For ultra-high-net-worth people who can afford lawyers, notarized documents and quick moves, establishing a new domicile can be done fast. But for many, lawyers say the timeline makes avoiding the tax effectively impossible.
Why some are leaving
Already, a handful of tech billionaires have signaled moves to Florida or Texas, states with no state income tax. Peter Thiel, David Sacks and others have publicly announced changes of residence or new offices out of state. Some venture capital figures have warned that a flight of taxpayers could make California’s budget problems worse.
There are practical incentives beyond taxes for relocating: hiring flexibility, regulatory environments and sometimes lifestyle. But the political signaling matters too — public threats to leave are often a way to pressure voters and lawmakers.
Why Huang is different
Huang’s response stands out because it frames the calculus differently. Nvidia’s business — and Huang’s own belief about where engineers and talent cluster — tie him to Silicon Valley in a way that feels nontransferable. “We chose to live in Silicon Valley,” he said. “And whatever taxes I guess they would like to apply, so be it.” For an executive whose company supplies much of the hardware that underpins today’s AI boom, the decision to stay signals confidence that proximity to talent and ecosystem outweighs tax considerations.
That AI-driven wealth creation is part of the backstory. The technology surge — GPUs, models, platforms — has created tens of billions of dollars in value and added dozens of people to the billionaire ranks in recent years. The wider conversation about where that money should be taxed is now colliding with fast, new fortunes. For context on how AI is reshaping the economy and sparking concentrated gains, see reporting on AI’s tipping point and developments across the sector, such as Microsoft’s MAI-Image-1, which underscore why firms cluster where engineering expertise sits.
Legal fights are likely
Tax lawyers expect lawsuits. Critics of the retroactive effective date argue it violates due process and could be deemed unconstitutional if it’s seen as an unprecedented retroactive tax. The Supreme Court has allowed retroactive taxes in limited circumstances, but judges typically scrutinize brand-new levies that reach back to capture behavior that occurred before voters had a chance to weigh in.
Others note practical enforcement headaches. How do you value complex portfolios, private company stakes or illiquid assets for a one-time levy? How will residency disputes be litigated? Expect long legal battles if the measure qualifies for the ballot and wins.
Politics and posture
The proposal has laid bare divides within California’s elite. Representative Ro Khanna and labor groups frame the tax as correcting an unfair system where working people shoulder higher effective rates than the ultrawealthy. Governor Gavin Newsom has opposed the idea, arguing California can’t isolate itself from the rest of the country. Some tech executives have responded with vitriol, social-media threats to primary politicians who back the tax and vows to move operations.
That push-pull — a mixture of idealism about funding public services and raw self-interest — is playing out publicly, in courtrooms and likely in campaign mailers if the measure reaches the ballot.
A question of trade-offs
The real test won’t be the rhetoric but the trade-offs each billionaire calculates. For some, tax savings will win. For others, being near a deep bench of engineers, specialized vendors and collaborators will be the deciding factor. For California, the risk is twofold: losing taxpayers and losing the intangible glue that makes the state a global innovation hub.
If the measure moves forward, expect more headline-making departures, high-stakes litigation and hard choices from voters who must decide whether a one-time levy on the ultrawealthy is a fair redistribution or an economically harmful experiment. Either way, Jensen Huang’s shrug — “perfectly fine” — has crystallized a debate that will be messy, expensive and consequential for where the next generation of tech fortunes are built and taxed.