Billionaire wealth tax
Ron Cleave
Patriotic Millionaire Board Chair Morris Pearl said he won’t leave New York City, even if he has to pay more in taxes.
Now, Nvidia CEO Jensen Huang, the eighth richest man in the world and California-based billionaire, has said that he’s “perfectly fine” with potentially paying a proposed wealth tax.
If you’re wondering what prompted Huang to offer this remark, we’re here to walk you through the “2026 Billionaire Tax Act,” an initiative organizers are trying to put on the November 2026 ballot that would impose a one-time 5% tax on the state’s billionaires.
November is a ways away, but given a relentless onslaught of panicked headlines that the proposal will lead the Golden State’s 200 or so billionaires to flee en masse, let’s break down what this measure and conversation is really about: the tax migration myth that just won’t die.
What’s the background on this ballot initiative?
A labor union representing health care workers, Service Employees International Union-United Healthcare Workers West, is the main organizer behind the “2026 Billionaire Tax Act.” The Act would establish a one-time, 5% emergency tax on the net worth of billionaires living in California as of January 1, 2026. The union estimates that roughly 200 California billionaires would be affected by the measure. Taxpayers would have the option of spreading payments out over five years; deferring the tax if, for example, their assets are in start-ups; and submitting independent third-party valuations of their assets if they believe the government didn’t assess them correctly.
Organizers estimate the tax will raise about $100 billion in revenue. 90% of the funds will be directed to healthcare, while the remaining 10% will be allocated for education and food assistance programs. California’s healthcare system in particular is facing a crisis because of federal cuts to Medicaid and Affordable Care Act subsidies brought on by the GOP’s “One Big Beautiful Bill Act.” If no action is taken, over the coming years insurance premiums will go up; millions of Californians will lose healthcare coverage; hospitals, clinics, and nursing homes may close; and nearly 145,000 jobs are expected to disappear. Organizers are aiming for the revenue from the billionaire tax to prevent this crisis from happening.
The California billionaire tax is far from a done deal. Organizers will need to gather nearly 900,000 signatures to even get it on the November ballot. Then, the initiative will need to garner majority approval from voters to become law.
Fears of a California billionaire exodus
Even with all the hurdles that remain to getting the initiative onto the ballot, some California billionaires and politicians are still loudly voicing their opposition. Gavin Newsom and many of the current candidates vying to replace the term-limited governor have publicly come out against it, expressing fears that it would drive billionaires to leave the state and take their valuable tax dollars and innovative minds with them. A handful of billionaires have said on and off the record that they will move because of the tax. In fact, high-profile names like Larry Page, Peter Thiel, and Sergey Brin have said they’ve already moved some of their offices outside of the state.
There is a significant amount of research and evidence that defies the idea that wealthy people in America are leaving and relocating from higher-tax places in droves. In his 2017 book, The Myth of Millionaire Tax Flight: How Place Still Matters for the Rich, Cornell University Professor Cristobal Young analyzed thirteen years’ worth of tax returns from US millionaires to better understand their migration patterns. He found that just 2.4% of millionaires move to a different state every year and that a mere 0.3% of them moved to lower-tax states specifically.
In December 2023, the Fiscal Policy Institute published a report that revealed the millionaire population in New York state—which has one of the highest tax burdens in the country—is growing, even after they faced tax hikes in 2017 and 2021. The Institute for Policy Studies found something similar when they studied Washington and Massachusetts after they instituted tax hikes on their richest residents in 2022, with both states experiencing an increase in their millionaire populations over the last few years. California’s own history refutes the myth too. After income taxes were raised on the state’s high earners in 2012 with the passage of Proposition 30, the state generated billions in new revenue and millionaires did not flee.
Data also show that most millionaires today live in higher-tax states. Big higher-tax states like California and New York have the most millionaires in absolute terms, while smaller higher-tax states like New Jersey, Maryland, and Connecticut have the highest proportions of millionaires in their populations.
Some commentators have also raised the point that, given that the California wealth tax ballot initiative would be a one-time, 5% levy on billionaires’ net worth in 2025, California billionaires will still be liable to pay it even if they decide to move now or in the future.
Outside of these hard numbers and facts, we also have our personal experiences as people of wealth to bring to bear to this question of tax migration. Many of us choose to live in higher-tax states and cities because they tend to provide a higher quality of life. States with higher taxes perform better on a variety of metrics compared to their lower-tax counterparts; they have lower crime rates, better schools, cleaner environments, and more.
Our final thoughts
In Deseret News, Patriotic Millionaire Scott Ellis offered his perspective on the California wealth tax initiative:
We would be pretty surprised if the California wealth tax ended up sparking anything resembling an exodus of the state’s billionaires. But even if it does, in our minds, that should strengthen, not weaken, lawmakers’ resolve to work together across the country to institute minimum tax standards on wealthy people like us. Billionaires shouldn’t get to “race to the bottom” on Tax Day, especially while millions of their fellow Americans dutifully pay tax every year as they live paycheck to paycheck.We’ll keep our eye on the California wealth tax battle and keep you posted as we learn more about what’s to come. But for now, do us a favor: don’t buy into the myth that the wealthy will leave if you tax them.