2026 began with revelations that numerous billionaires owning upwards of $1 trillion in assets had cut ties with California just before the ball dropped on January 1. These well-heeled folks did not suddenly get tired of California’s weather, scenery, culture, or social scene. Instead, they were avoiding a potential wealth tax hatched by a group of academics and the Service Employees International Union-United Healthcare Workers West (SEIU-UHW).

Billionaire exodus was not the stated goal of the wealth tax proponents: it was an unintended consequence of the ballot language drafting and revision process. SEIU-UHW is a veteran of ballot measure warfare but has a mixed record. It spent $37 million on three failed measures (2018 Proposition 8, 2020 Proposition 23, and 2022 Proposition 29) to regulate the state’s dialysis industry. But their current plan to fan class envy in hopes of securing $100 billion in new state revenue is a far more audacious effort.

The original language of Billionaire Wealth Tax set an effective residency date of January 1, 2025, which would have made avoidance legally impossible for current residents. However, after intense legal scrutiny lead to fears that the measure would fail in court, proponents filed an amendment on November 26, 2025. This new version shifted the tax obligation date to January 1, 2026 opening a narrow escape hatch for the billionaires.

The fiscal impact of the billionaire exodus is hard to assess. While they are already subject to California’s top 13.3% personal income tax rate, many (or most) utilize tax avoidance strategies like borrowing against appreciated stock rather than selling it. The Legislative Analyst's Office put the potential state income tax revenue loss at hundreds of millions of dollars per year, but LAO made its estimate before the exodus began.

Also the revenue implications for the state transcend a few dozen billionaire tax returns. As these billionaires spend more time outside California, they will network with and invest in more non-California founders. David Sacks, for example, announced the opening of a new Craft Ventures office in Austin in late 2025. This migration threatens to pull California’s growth trajectory downward by compromising Silicon Valley’s dominance of artificial intelligence.

The companies that made their founders ultrarich might also move more of their operations outside the state. In the case of Google, as co-founders Larry Page and Sergey Brin finalized their departures, the company began aggressively filling its vacant office tower in Austin. While the founders have stepped back from day-to-day management, they sometimes work on special projects at Google and may want to interact with employees. As they try to limit their time in California (to avoid scrutiny from state tax authorities), they’ll prefer to work with non-California-based Googlers.

If California’s share of tech workers drops (faster than it already is), income tax receipts will be severely impacted. Considering that the top 1% of earners already account for close to 40% of the state’s personal income tax, the loss of hundreds of highly compensated software engineers could have a material impact on state finances.

In conclusion, it seems that SEIU-UHW should have been more careful when trying to control California’s tax policy through the ballot box. Negative publicity may cause the ballot drive to come up short, or the measure may fail in November. If it does, California state government will have less money to pay their members’ salaries and cover its other priorities.

Upcoming Events (all lunches at Denny’s)

Friday. January 23^rd: Contra Costa Governments Spend Big – Get a breakdown of CoCo County’s $13 billion public sector from my recently released research paper.

Friday, February 27th: Get the Full Story on Marin Clean Energy from MCE CEO Dawn Weisz. Note change in speaker. Rather than center our program around an outside critic, we will give Dawn the platform to respond to previously published criticism and to address our questions.

Friday, March 27th: When Public Schools Stray from Education – Attorney and public school mother Laura Powell will discuss her thoughts about the waste and parental rights violations occurring as local school districts focus on student gender identity rather than teaching the ABCs.