Technology billionaires are reportedly preparing to leave California in anticipation of a potential ballot initiative that would impose a tax on their wealth to fund healthcare initiatives.
Reports indicate that venture capitalist Peter Thiel is considering spending increased time away from California and establishing an office for his Los Angeles-headquartered investment firm, Thiel Capital, in a different state.
In a related development, sources informed the Times that Google cofounder Larry Page has talked about departing the state before the end of the year. This coincides with three limited liability companies linked to him having submitted paperwork to incorporate in Florida.
Neither The Thiel Foundation nor Alphabet, Google’s parent company, provided immediate comments. Representatives for both Thiel and Page also did not reply to the Times.
Tech investor Chamath Palihapitiya has issued a warning about the dangers of a wealth tax in California, predicting it could ultimately lead to the state’s bankruptcy.
“The unavoidable result will be a departure of the state’s most skilled entrepreneurs, who have the ability and the inclination to establish their businesses in states with less burdensome tax systems,” he stated on Monday. “The middle class will be the only group remaining. Consequently, the tax burden will shift to the middle class because, once the wealthiest individuals depart, they represent both (a) the sole remaining population and (b) the biggest pool of state income from which to collect taxes.”
On Friday, in response to someone encouraging him to relocate to Texas, he noted that the idea is “under serious consideration.”
Supporters of the proposed wealth tax still need to collect a sufficient number of signatures for it to be eligible for the November 2026 ballot.
The initiative would require California residents with a net worth exceeding $1 billion to pay a single tax amounting to 5% of their total assets. Reports estimate Larry Page’s wealth at $270 billion and Peter Thiel’s at $27.2 billion.
The Service Employees International Union-United Healthcare Workers West, the healthcare union advocating for the measure, projects the tax could generate $100 billion in revenue, which would help compensate for federal funding reductions.
However, California Governor Gavin Newsom, a Democrat and a prominent potential presidential candidate, has expressed opposition to the proposal.
A trend of companies relocating from California to jurisdictions with lower taxes and simpler regulations is already underway. Elon Musk has moved both Tesla and SpaceX to Texas.
Furthermore, although the headquarters of leading AI firms are in California, new data centers and AI infrastructure are increasingly being constructed outside the state, where resources like land, water, and power are more readily accessible.
Similar concerns about a mass departure were voiced in New York following the election of democratic socialist Zohran Mamdani as mayor last month. However, such an exodus has not yet occurred, as evidenced by data from November.
Democratic Representative Ro Khanna, whose district includes part of Silicon Valley, argued that public tax revenue contributed to building the AI sector. He rejected the notion that a 1% tax would deter tech founders from establishing companies in the state, emphasizing that the region’s talent pool continues to attract innovators.
“We cannot accept a nation where wealth is extremely concentrated in a handful of locations while 70 percent of Americans feel the American dream is unattainable and essential services like healthcare, childcare, housing, and education are out of reach,” he said. “What will truly hinder American innovation and cause us to lag behind China is increased political dysfunction and social unrest, along with a failure to nurture talent in every American and every community across the country.”
Nevertheless, he conceded there are valid concerns regarding accountability and the potential for fraud with state tax dollars, stating that Sacramento must implement anti-corruption safeguards.
Blake Scholl, the founder and CEO of Boom Supersonic, cited the billions of dollars California has allocated to a high-speed rail project that is both over budget and behind schedule as an example of fiscal mismanagement.
“This is ethically incorrect and results in negative outcomes for all involved,” he posted in a reply to Khanna on the social media platform X.