California wealth tax proposal hemorrhages $1T as billionaires flee

Venture capitalist Chamath Palihapitiya says California’s proposed billionaire tax is accelerating an exodus of ultra-wealthy residents, a shift he argues will worsen and not solve the state’s budget deficit.

Palihapitiya, who has been tracking capital flight from the Golden State, said California has so far lost an estimated $1 trillion.

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"We had $2T of billionaire wealth just a few weeks ago. Now, 50% of that wealth has left - taking their income tax revenue, sales tax revenue, real estate tax revenue and all their staffs (and their salaries and income taxes) with them," Palihapitiya wrote on X on Sunday.

Even as the measure remains under consideration for the November statewide ballot, some of Silicon Valley’s most prominent figures warn it could trigger an exodus of founders and capital.

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California has long depended on its billionaire class, among the largest in the nation, to help fund the state budget.

"California billionaires were reliable taxpayers," Palihapitiya wrote. 

"They were the sheep you could shear forever. Now California will lose this revenue source forever. Unless this ballot initiative is pulled, we will not stop the billionaire exodus. With no rich people left in California, the middle class will have to foot the bill."

His comments come as California voters consider a proposed ballot initiative backed by the Service Employees International Union–United Healthcare Workers West that would impose a one-time 5% tax on the assets of California residents worth more than $1 billion.

Supporters say the revenue could help offset federal funding cuts for healthcare.

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In December, California Gov. Gavin Newsom said he opposed the proposed billionaire tax, while cautioning against panic over the measure.

"It's not something to be panicked about, but it's part of the broader concern and narrative that's developed in this country of the haves and have-nots, not just income inequality, but wealth inequality," Newsom told an audience at The New York Times DealBook conference.