By California’s proposed Billionaire Tax Act would raise $100 billion from approximately 200 ultrawealthy residents through a retroactive 5% wealth tax announced January 14-17—and Silicon Valley’s biggest names are already fleeing. Larry Page and Sergey Brin purchased $223 million in Miami waterfront homes this month, Peter Thiel donated $3 million to defeat the measure, and the exodus threatens to permanently destroy the tax base the one-time levy was designed to tap. The retroactive January 1, 2026 cutoff gave billionaires mere weeks to relocate, and a hidden voting-shares provision could turn the advertised 5% rate into a 50% asset seizure for founders with dual-class stock.
The Voting Shares Trap That Turns 5% Into 50%
The proposal’s most damaging provision taxes voting control percentage, not actual economic ownership. Larry Page owns roughly 3% of Google but controls approximately 30% voting power through Class B supervoting shares—under this tax, he’d be assessed as owning 30% of Alphabet’s market cap, potentially turning a “5% tax” into a wealth confiscation that wipes out half his holdings. Consequently, the formula hits every dual-class founder: Google, Meta, Snap, and thousands of tech startups with supervoting structures.
A SpaceX alumni founder building grid technology faces a complete wipeout at the Series B stage due to this provision. His voting shares exceed economic ownership by 10x, meaning the 5% California billionaire tax calculates against phantom equity he doesn’t actually own. Moreover, founders can submit alternative valuations from certified appraisers, but the process remains unclear and may not be accepted. Most coverage focuses on the 5% rate—the voting shares provision is the real killer.
Retroactive Clause Eliminates Escape Route
The tax applies to anyone who was a California resident as of January 1, 2026—a retroactive clause announced in December that gave billionaires minimal time to relocate. Constitutional experts say retroactive new taxes face serious legal challenges. The Supreme Court allows retroactive taxes with “rational legislative purpose,” but creates exceptions for “wholly new tax” types. Furthermore, this retroactive wealth tax checks both boxes for trouble.
Billionaires who were planning California exits in 2026 are now trapped. However, future billionaires have a clear incentive to leave before hitting the $1 billion threshold. The retroactive clause doesn’t just grab current wealth—it creates permanent exodus pressure for anyone approaching billionaire status who wants to avoid getting caught by the next “one-time” tax.
Tech’s Biggest Names Are Actually Leaving
Larry Page ($270 billion net worth) bought $173 million in Miami homes. Sergey Brin offered approximately $50 million for Miami Beach waterfront property. Additionally, Peter Thiel ($27.2 billion) donated $3 million to the opposition committee. These aren’t threats—they’re actual real estate transactions and million-dollar donations showing the Silicon Valley exodus is real.
Jensen Huang (Nvidia CEO) says it “never crossed his mind” to leave California, showing the industry is split. Nevertheless, the majority remains undecided, waiting to see if 874,641 petition signatures qualify the measure for November’s ballot. Florida wins every relocation (no state income tax, no wealth tax), and the migration accelerated immediately after December’s announcement.
Newsom Caught Between Labor and Business
Governor Gavin Newsom calls the tax “really damaging” and promises “This will be defeated. There’s no question in my mind.” His strong opposition puts him in direct conflict with SEIU-UHW healthcare workers union pushing the measure. In fact, with a 2028 presidential run looming, he can’t afford to openly side with billionaires or alienate powerful labor unions. The ballot initiative needs 874,641 signatures to qualify for November 2026’s vote—union power in California is formidable, and wealth taxes poll well until voters understand the consequences.
$100B One-Time Grab Costs Billions in Perpetual Revenue
California targets $100 billion from 200 billionaires to fund healthcare after federal cuts (90% healthcare, 10% education). The economic calculation is brutal: one-time $100 billion versus permanent loss of income tax revenue from billionaires who leave forever. Indeed, California already has a 13.3% top income tax rate—the highest in the nation. Losing the billionaires who actually pay that rate is catastrophic.
The tax assumes net worth equals liquidity, potentially forcing stock sales that crater markets. A deferral account mechanism delays tax until shares sell, but that just postpones the pain. Once they leave, they don’t come back. Therefore, the proposal gambles $100 billion one-time against billions in annual tax revenue California won’t collect from Miami residents.
