Name: California tax fears fuel exodus debate
Uploaded: 2025-12-29T18:25:55.608Z
Duration: 3 min 6 s
Description: CNBC’s Kate Rogers reports on billionaires threatening to flee California over a proposed 5% wealth tax.

CNBC’s Kate Rogers reports on billionaires threatening to flee California over a proposed 5% wealth tax.

California is considering a proposed 5% wealth tax targeting residents with assets exceeding one billion dollars, with payments due starting in 2027 and applied retroactively to those residing in the state as of January 1, 2026. The initiative, which has not yet been placed on the November 2026 ballot, has prompted public debate over its potential to drive wealthy entrepreneurs and companies out of California.

Prominent figures such as Peter Thiel and Larry Page are reportedly considering reducing their ties to the state, while critics argue the tax could disincentivize innovation by taxing unrealized gains. Supporters, including Representative Ro Khanna, contend that California's concentration of talent will keep entrepreneurs in the state. Governor Gavin Newsom has expressed skepticism about the proposal, noting concerns over its long-term effects on state revenue and population retention.

California tax fears fuel exodus debate

Welcome back some of California's wealthiest residents are threatening to leave the state over this proposed 5% wealth tax Kate Rogers has the details Kate this what a firestorm broke Ro Khanna was the least popular Member on X last night. I know my gosh Sarah good morning So this is a one-time tax that would call for California residents worth more than a billion dollars to be taxed the equivalent of 5% Of their assets due in 2027 payments spread out over five years It is retroactive. It would apply to state residents as of January 1st, 2026, which is just days away It's also important to note the tax proposal not officially on the November 2026 ballot It might not wind up there at all But it is causing a public battle on whether or not this will simply kill innovation and cause a talent exodus Venture capitalists Peter Thiel and Google co-founder Larry Page are considering leaving the state or cutting reducing their California ties by the end of the Year, that's according to the New York Times reporting others including investor Chamath Palihapitiya fired back on X writing quote The inevitable outcome will be an exodus of the state's most talented Entrepreneurs who can and will choose to build their companies in less regressive states Gary Tan president of the startup incubator Y Combinator blasted the proposal as a quote unrealized Gains tax that puts founders on the hook for becoming paper billionaires other states like Washington or Florida For example without income taxes could look more appealing for launching companies in the future Now as you said representative Ro Khanna, whose district does include Silicon Valley defended the ballot initiative saying that entrepreneurs will stay in California because this is where the talent they need is concentrated writing on Expo Jensen wasn't thinking I won't start this company because I may have to one day pay a 1% tax on my billions He built here because the talent is here, you know reminder California has lost some big companies like Tesla which relocated its headquarters out of the state But the battle here Sarah really sparking over future companies launching here versus companies leaving and taking talent with them And I think that and what what strikes such a nerve and why I really I felt like it was by partisan criticism of this It wasn't just you know billionaires on the right and or wealthy wealthy entrepreneurs on the right It was on the left too. Is that you know, when you start a business, it's it's paper gains, right? And then tax it and the unrealized it's not like real estate It can it can fluctuate in a given day or in a given month And so it disincentivizes entrepreneurs to start businesses because they're just gonna have their assets seized By the the government which cannot manage its health care system well and one other thing that will be watching here for sure of course is where governor Newsom lands on this because he did say at The deal book conference that you know This is not a good idea because it encourages people to leave the state over the long term Of course, this would decrease state income tax revenues But this is also an opportunity for Newsom who you know is floated by many as someone who's going to run for president You know to side with working-class people. So does he wind up, you know siding with tech elite here billionaires? Or does he side with the working class in the SEIU and a health care workers union which are putting this initiative forward for vote guys

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