California’s latest attempt to tax the ultrawealthy is raising fresh questions about economic fairness and possible unintended consequences, which critics say could hurt the rich and vibrant tech-based culture that has helped elevate the state over the years.
A proposed ballot initiative backed by the Service Employees International Union-United Healthcare Workers West would impose a one-time 5% levy on the worldwide assets of individuals with net worth above $1 billion who were California residents as of January 1.
As reported by the Wall Street Journal, the measure would tax stocks, artwork, intellectual property and other assets, and give affected taxpayers five years to pay. Proponents say the tax could raise about $100 billion to offset looming federal cuts to Medicaid and stabilize the state’s healthcare system.
The prospect of a retroactive state wealth tax has already drawn sharp reactions from Silicon Valley and Wall Street figures. Bay Area investor Chamath Palihapitiya, who built his fortune as a venture capitalist and has been nicknamed the "SPAC King," said on X that he knew of people “with a collective net worth” of $500 billion who “scrambled and left California for good” before the end of 2025, warning that “without these people, the California budget deficit will only get bigger.”
Some high-profile investors are expanding their footprints elsewhere. Peter Thiel’s Thiel Capital announced a new office lease in Miami, while Craft Ventures, co-founded by David Sacks and Bill Lee, said it has signed a lease for office space in Texas and that both founders will work out of the new Austin office. The firms did not explicitly link the moves to the tax proposal.
Still, supporters of the bill have shrugged off warnings of mass billionaire flight. Claims of the ultrawealthy fleeing to avoid taxation “are often overstated, and decades of research show that tax-driven migration among the very wealthy is limited,” said Suzanne Jimenez, chief of staff at the union and the ballot measure’s sponsor. She called the proposal “simple, one time, fair, and workable now” and said, “asking those who have benefited most from the economy to contribute more – particularly to stabilize healthcare systems under direct threat – is not radical. It is reasonable.”
Opponents, including California Governor Gavin Newsom and some of the state’s billionaire class, are gearing up for a legal fight. In a letter to Newsom, attorney Alex Spiro warned that his billionaire clients were ready for “protracted and expensive” litigation and argued the tax could trigger an exodus of wealthy residents and force asset sales that risk market instability.
From the world of academia, economists at the University of Pennsylvania’s Wharton School cautioned that taxing wealth, or imposing levies on unrealized capital gains, would incentivize startup founders to cash out their stakes earlier to pay their taxes. Effectively, they would lose the ownership that would entitle them to the potential upside of their business.
“It’s really bad for the founders, because it takes away money if I succeed,” Eduardo Azevedo, who co-authored a study that found just 84% of startup founders eventually see an equity payoff from their ventures, told Barron's in an interview.
The California fight is unfolding alongside a broader national reassessment of how the rich should be taxed. Hedge fund manager Bill Ackman, who resides primarily in New York, has criticized the California plan as “an expropriation of private property” while promoting a federal tax on personal loans backed by appreciated assets to target the “buy, borrow, die” strategy used by some billionaires.
And in a New York Times op-ed last month, former senator Mitt Romney wrote that “it’s time for rich people like me to pay more” in taxes, asserting that the biggest potential source of new revenue comes from closing what he described as tax-code “caverns” benefiting the wealthiest Americans.
Shareholder targets FS KKR Capital's directors over alleged portfolio valuation and dividend missteps.
UBS has a history of costly litigation stemming from the sale of volatile investment products.
New director David Woodcock puts firms on notice over fees, conflicts, and liquidity risk as private credit shows signs of stress.
Advisors can help “separate the math from the emotion” when it comes to retirement, says JPMorgan’s Michael Conrath.
New product gives advisors a structured way to introduce themselves to clients' heirs before assets change hands.
Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline
Ultra-high-net-worth investors aren’t retreating from risk. They're redefining it, balancing safety with selective conviction
