You know that California is looking to squeeze more than a few pennies out of its wealthiest residents, and they are already fleeing for greener pastures. Now, Professor Hank Adler of Chapman University explains in The Wall Street Journal that the Golden State will face “immediate and significant consequences” if it goes through with its plan to tax wealth.
The flight of even a handful of California’s highest-earning taxpayers from the state has immediate and significant consequences for Sacramento’s finances. Although California doesn’t currently tax wealth directly, it heavily taxes the income generated by wealth—particularly capital gains. When billionaires change their state of residence, California largely forfeits the ability to tax those gains in the future. Former residents who are company founders won’t pay California income taxes when they sell shares in their companies after they leave the state.
Even before the introduction of the billionaire tax, the state was losing significant tax revenue as rich residents departed. Earlier this decade, Larry Ellison and Elon Musk—then among California’s wealthiest residents—relocated to Hawaii and Texas respectively. Apparently in reaction to the proposed billionaires tax, Sergey Brin and Larry Page late last year became Florida residents, and Mark Zuckerberg reportedly established a residence there early this year. Together these five men once accounted for roughly $1.7 trillion of the more than $1.8 trillion net worth held by California’s six richest residents earlier in the decade.
The sixth is Nvidia founder Jensen Huang, who remains in California and whose estimated wealth exceeds $150 billion. Only one other Californian is estimated to have a net worth over $30 billion.
Analysts from the Hoover Institution, a think tank at Stanford University in California, have produced a study that suggests California will actually lose money by attempting to tax wealth in the state. They listed their key findings on Liberty Lens, explaining:
This past fall, a coalition of labor unions filed the 2026 Billionaire Tax Act (“the Act”) with the California Attorney General. The ballot initiative would impose a “one-time” 5 percent tax on the worldwide net worth of individuals with assets exceeding $1 billion. In a report proponents of the Act estimated revenues of $100 billion. That figure begins with the $2.19 trillion aggregate net worth of California’s billionaires, applies the 5 percent rate to arrive at $109.5 billion, then assumes that avoidance and evasion will reduce collections by just 10 percent.
We decided to do calculations of our own, and we found much different results. Our key findings are as follows:
- We project wealth tax revenue of approximately $40 billion, compared to the $100 billion claimed by proponents
- The net present value (“NPV”) of the Act, which reflects expected wealth tax revenues as well as losses of income tax revenues from departing billionaires, is NEGATIVE $24.7 billion; across 100,000 simulations, 71 percent of scenarios yield a negative NPV.
- It is incorrect to think of the measure of a one-time tax based on the Act’s changes to California’s state Constitution.
Action Line: Will Californians sign up to support a wealth tax that could leave their state government poorer? When politicians put their own radical agendas ahead of the best interests of their residents, bad decisions will be made. No wonder so many wealthy people are leaving California. If you’re looking for a better America, start your search with Your Survival Guy’s 2026 Super States. And click here to subscribe to my free monthly Survive & Thrive letter.
