Can a ballot measure redraw the map of American wealth? California’s proposed Billionaire Tax — a one-off 5% levy on residents with net worth above $1 billion, retroactive to Jan. 1, 2026 — has set off a flurry of maneuvers from the state’s richest people and their advisers. What began as a grassroots push to shore up services quickly turned into a chess match: asset transfers, LLC conversions, public threats to decamp and immediate legal hand-wringing.
A scramble, quietly and loudly
Not every response has been a protest. Some of the state’s ultrawealthy have quietly restructured entities or shifted paperwork. In late December, an LLC tied to Google cofounders moved out of California and was reconstituted in Delaware with a Nevada office on record — a maneuver aimed at changing the legal address of an entity that might hold assets or manage investments. Around the same time, one of those cofounders converted a family office into a Delaware vehicle as well.
Others have made noisier exits. High-profile figures like Peter Thiel and venture capital voices have signaled or taken up residence in Florida or Texas; some have even publicized their relocations as political statements. At the other extreme, Nvidia CEO Jensen Huang told reporters he’s "perfectly fine" staying put and paying whatever the state levies. That split — between flight and acquiescence — is shaping the debate as much as any legal memo.
Why the timing matters
The measure’s retroactive start date is the fulcrum. By applying to residents as of the first day of 2026, it shrinks the window wealthy Californians have to establish tax ties elsewhere. That’s intentional: backers say it prevents last-minute flight after the measure passes and preserves revenue intended to plug budget holes in education, healthcare and food assistance.
Legal and tax experts warn the provision makes the law ripe for litigation. California determines residency using a "closest connection" framework that weighs where someone lives, works, holds family and social ties, and where their property and business dealings are concentrated. Proving a new, permanent domicile isn’t as simple as buying a plane ticket and a house; judges look for clear demonstrations of intent spanning months.
Attorneys point out two predictable consequences: one, many billionaires will try to change residency before an election even if the measure is not yet approved; two, some plaintiffs will sue on constitutional grounds if the law is enacted with retroactive effect. Both routes are messy and uncertain.
Dollars, talent and the politics of migration
Supporters estimate the one-time levy could raise tens of billions of dollars — figures in the $100 billion ballpark have been floated — by applying a 5% cut across the roughly 200–250 Californians above the $1 billion threshold. Opponents counter that this could chase away taxpayers and entrepreneurs, hollowing out the state’s tax base and sapping the dense cluster of talent and capital that makes Silicon Valley hum.
There’s a deeper question beyond money: will policy choices drive the next wave of innovation centers? Some technologists and investors argue migration to states like Texas and Florida will reorient where founders live and companies incorporate. Others — including some members of Congress who represent tech hubs — say that the ecosystem, not just the person with deep pockets, keeps people rooted in California. The state’s ongoing role in AI, cloud computing and hardware development complicates any simplistic prediction; infrastructure and talent don’t move overnight. For context on how big companies and projects keep their hands in California and elsewhere, consider recent shifts in corporate AI strategies like Google’s agentic features for services and moonshot infrastructure ideas that aim to place data centers in novel locations Google AI Mode’s booking features and efforts to rethink where data centers live.
What escape looks like — and why it’s hard
For the super-rich, escaping a tax isn’t only a question of a new mailing address. Lawyers stress that the proof of new residency must be comprehensive: homes, family moves, personal effects, business changes, and a paper trail of intent. The cost and complexity push many into legal strategies instead: entity conversions (moving LLCs to Delaware or Nevada), changing where family offices are incorporated, and restructuring holdings to complicate valuation.
Even then, valuation disputes over complex holdings — private equity, illiquid stakes, art, aircraft and start-up equity — can themselves spark litigation. If a court finds the retroactive application unfair or unconstitutional, that complaint could topple the scheme or force revisions. If the courts uphold it, the state stands to collect a historic infusion of cash but risks prolonged reputational fallout.
A political puzzle
Governor-level politics complicate the path to ballot. The measure must collect hundreds of thousands of valid signatures to qualify and face a campaign that will draw deep-pocketed opposition. California’s history with high-profile ballot measures is mixed; even with robust backing, success is not guaranteed.
What’s clear is that this debate won’t end with November. It’s exposing trade-offs — revenue now versus the potential long-term loss of mobile capital and talent — and prompting rapid retooling by people for whom tax strategy is a routine planning exercise. Whether the wealthy ultimately leave, litigate, pay or grudgingly stay will depend on courtrooms, state politics and how quickly both taxpayers and the state adapt to what could be a very different financial landscape.
Tags: California, Wealth Tax, Billionaires, Tech, Tax Policy