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The non-exodus of California billionaires |
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The media says they’re fleeing a wealth tax. Except, they’re not. |
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Nary a day has passed of late that hasn’t seen stories about the billionaires’ flight from California, lest they be subjected to a proposed wealth tax that hasn’t yet gathered the required signatures to qualify for the ballot. The fact that there is no billionaires’ flight from California hasn’t impeded the flow of such tales.
“Why Are Billionaires Bolting California?” asked a headline in today’s New York Times print edition. “How Tech Billionaires Spurred an Exodus of Rich People From California,” read a Washington Post headline from earlier this week. “Billionaires flee,” began a Wall Street Journal video posted last Sunday.
Except, they aren’t. The three most prominent billionaires reported to have moved—Google founders Larry Page and Sergey Brin, and the libertarian critic of democracy as a form of government Peter Thiel—all said they’ve moved some of their offices to other states or opened new offices there, but they did not say that they themselves had moved. The proposed wealth tax only applies to billionaires who are residents of California, and none of the three have actually said that they themselves want to abandon their Golden State residency.
David Sacks, Donald Trump’s AI and crypto czar despite his ongoing investments in such concerns, did indeed say that like Elon Musk, his fellow white South African native, he’d moved to Texas, though in both cases we’re compelled to assume that this was only because Boer-controlled South Africa was no longer a going concern.
One Bay Area billionaires’ tax attorney has also reported that some of his clients are looking into moving. But since the tax, if enacted by voters this November, applies to billionaires who lived in California on January 1 of this year, moving at this point or later wouldn’t affect their wealth tax liability. Moreover, it’s a one-time-only tax on 5 percent of the state’s billionaires’ wealth as of 2025; if enacted, it wouldn’t apply to new billionaires, or billionaires moving in from other states, much less any billionaires who choose to relocate now. |
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Besides, as the Prospect and a host of others have documented, raising taxes on the very rich has a negligible effect on billionaire residency. When New York raised its taxes on residents with annual incomes exceeding $2.16 million in 2021, a study from the Fiscal Policy Institute found that the top 1 percent of income owners moved out of state at a rate of 0.2 percent. If we apply that rate of out-migration to California’s estimated 200 billionaires, we’d find that the number actually leaving would be a little less than half of one person. In other words, David Sacks has already got it covered. For that matter, an income tax hike on the richest Californians that state voters enacted in 2012 yielded no millionaire exodus, either.
What all of these stories fail to consider is the number of Californians who’d be able to retain their ACA and Medicaid coverage if the proposal is enacted by California voters, as the funds from the tax would make up for cuts to those programs enacted by Donald Trump’s One Big Beautiful Bill. Their residency plans if this tax isn’t approved have not been the subject of any stories, just as the coverage of the income tax hikes that Zohran Mamdani proposed on New York’s millionaires in order to fund universal child care failed to reckon with the number of young families compelled either to leave the city or reduce other spending in the local economy due to the cost of child care.
Even if we grant that the David Sacks trickle might grow to a full drop of California’s billionaires, that only makes the case for a national wealth tax all the stronger. It certainly is theoretically possible that state wealth taxes, particularly if their windows of liability cover future periods of wealth (as the proposed California version does not), could prompt more billionaire state bouncing. But a nationwide tax would suffer no such consequences, and, indeed, would set in motion a profoundly win-win dynamic. If billionaires chose to remain Americans, a modest share of their wealth would go to provide demonstrably needed human services, infrastructure investment, and the like. If they chose to move abroad, they could no longer legally contribute to U.S. political campaigns, thereby weakening the oligarchy’s sway over U.S. politics and policy.
If that’s not a win-win, I don’t know what is. Would that Democrats like Gavin Newsom, who are committed to stopping the billionaire tax, take this into account.
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Harold Meyerson
Editor-at-Large |
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Harold Meyerson
Editor-at-Large |
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