California’s proposed California wealth tax is already triggering real-world consequences—even before voters decide its fate. According to U-Haul’s 2025 Growth Index, Texas has reclaimed its spot as the top destination for movers, while California ranked last in net migration for the sixth year in a row.
This trend isn’t accidental. Between July 2024 and July 2025, California lost more residents to domestic migration than any other state. Meanwhile, Texas gained more new residents than all but North Carolina. The reason? A growing divide in state policy—especially on taxation.
At the center of the debate is the “2026 Billionaire Tax Act,” a proposed 5% levy on household net worth over $100 million. If approved, it would apply retroactively from January 1, 2026. Critically, this retroactive clause has already spurred action. High-net-worth individuals—including an estimated one-third of California’s billionaire wealth—took steps in late 2025 to establish residency elsewhere.
For example, Google co-founder Larry Page moved key business entities out of California. His family office incorporated in Delaware, with principal addresses now listed in Florida, Texas, and Nevada. Oracle founder Larry Ellison and tech executive David Sacks followed suit—Sacks publicly announced his move to Austin on December 31, 2025.
Why does this matter? Because unlike income, wealth often exists on paper—illiquid assets like stock or real estate. Forcing owners to sell just to pay a tax creates severe economic distortion. As David Friedberg of the All In podcast noted, such a levy amounts to “the seizure of private property,” even when assets are tangible.
Moreover, California already imposes some of the nation’s highest tax rates. Residents earning over $1 million pay more than 53% in combined state and federal taxes. Yet, the state continues to struggle with service delivery—fueling frustration among taxpayers who feel they’re paying more for less.
In contrast, Texas offers a compelling alternative. It has no personal income tax. And in 2025, voters approved a constitutional amendment banning capital gains taxes. As a result, businesses and investors gain long-term certainty that their returns won’t be eroded by future tax hikes.
Interestingly, even California Governor Gavin Newsom opposes the wealth tax initiative. Despite this, labor unions continue gathering signatures—needing 874,641 valid ones by June to qualify for the November ballot. But here’s the twist: under California law, lawmakers can still negotiate a compromise and remove the measure from the ballot—even after it qualifies.
Still, the damage may already be done. Because the tax would apply retroactively, many wealthy residents are leaving preemptively. As Tax Foundation expert Jared Walczak explains, “You might have billionaires change residency anticipatorily—and keep it that way, even if the measure never passes.” That means permanent revenue loss for California.
Ultimately, the California wealth tax debate highlights a national shift. States like Texas, Florida, and Tennessee are winning investment by prioritizing tax predictability. Meanwhile, California risks accelerating its own economic decline—not through policy failure alone, but through the mere threat of confiscatory taxation.
Whether or not the ballot measure succeeds, the message is clear: in an age of high mobility, capital—and people—will follow freedom, not just opportunity.
