‘You’re really playing with fire here’: California billionaires tax ignites, pitting labor unions and voters against tech execs
A proposed tax targeting billionaires in California has sparked political turmoil in Silicon Valley, as tech industry leaders threaten to leave the state while Democratic Governor Gavin Newsom works to defeat a levy he worries could trigger a mass exodus of wealth.
As a global technology hub, California is home to more billionaires than any other U.S. state—an estimated several hundred. The top 1% of earners contribute nearly half of the state’s personal income tax revenue, a financial cornerstone of its roughly $350 billion budget.
A major [group] is seeking to put a proposal before voters in November that would impose a one-time 5% tax on billionaires’ assets—encompassing stocks, art, businesses, collectibles, and intellectual property—to offset federal funding reductions to [programs] for low-income individuals, which were enacted by President Donald Trump last year.
In a state marked by stark income inequality, the plan has created a web of conflicting interests at a moment when both Democrats and Republicans are grappling to address economic unease fueled by rising costs ahead of this year’s midterm elections.
An online battle of rhetoric has tech leaders fretting over the potential hollowing out of Silicon Valley, with millions of dollars flowing to political committees involved in the fight. This includes $3 million from billionaire [name], a co-founder of PayPal, to a committee linked to a business group opposing the tax.
However, it remains unclear if the proposal will make the ballot, as it requires more than 870,000 valid petition signatures to qualify.
Threatened exodus
Though the tax would impact only a tiny fraction of California’s approximately 39 million residents, it would draw funds from a massive pool of wealth. It would apply retroactively to billionaires residing in the state as of January 1.
Based on an Associated Press review, at least 25 billionaires listed in Forbes magazine’s 2025 ranking of the world’s 500 wealthiest individuals either lived in California or had significant ties to the state. Yet determining whether they are full-time residents or frequent visitors could become a point of contention, as many own property elsewhere.
“You are really playing with fire with this one,” said Aaron Levie, CEO of the publicly traded Silicon Valley firm [company]. He fears the proposed tax would push entrepreneurs to relocate their companies and launch startups outside the state.
Even tech pioneers with liberal leanings would “find it absurd on purely economic and structural grounds, even if they might agree the cause itself is highly worthwhile,” said Levie, who is not a billionaire.
Governor worries about a competitive disadvantage
Newsom has long opposed state-level wealth taxes, believing such levies would harm the world’s fourth-largest economy. With California facing financial strain and Newsom eyeing a 2028 presidential bid, he is working to block the proposal before it reaches the ballot.
Analysts warn a billionaire exodus could result in the loss of hundreds of millions in tax revenue.
“It’s one reason Newsom’s path to the Democratic nomination won’t be easy,” said Jack Pitney, a political scientist at Claremont McKenna College. “He’s already confronting a budget deficit of uncertain size … and in the coming years, a billionaires tax that could backfire severely.”
Democrats divided on the issue
The proposal has deepened tensions between Newsom and prominent figures in his party’s progressive wing, including Vermont Senator Bernie [Sanders], who has endorsed it and called for it to serve as a model for other states.
“Our nation cannot thrive when so few have so much while so many have so little,” Sanders said on the social platform [name].
Another supporter—and potential 2028 rival to Newsom—is Democratic Representative Ro Khanna, who mocked billionaires for threatening to leave over a tax aimed at providing healthcare to low-income residents.
The measure’s lead [sponsor], the Service Employees International Union, dismisses the exodus threat as overblown.
The tax is a “practical solution to a crisis created by Congress,” Suzanne Jimenez, chief of staff for SEIU-United Healthcare Workers West, stated. She added it would “keep emergency rooms operational, hospitals staffed, and healthcare systems functioning.”
The California Business Roundtable, meanwhile, is leading efforts to defeat the measure, arguing it would “undermine our economy, devastate the state budget, drive investment out of California, and ultimately make daily life costlier for working families.”
A business climate known for heavy regulation and steep costs
Departures from California due to its high cost of living and reputation for strict regulations gained momentum long before the proposed wealth tax began circulating last year.
[Elon Musk], the world’s wealthiest person with a $724 billion [fortune], purchased a home in Texas and moved his electric automaker [Tesla] to Austin several years ago.
The financial threat posed by the proposed tax appears to be pushing more of Silicon Valley’s iconic innovators to reduce their ties to California and its liberal policies, including [Google] co-founders Larry Page and Sergey Brin, who moved to the state in the mid-1990s to attend Stanford University for graduate studies.
Page and Brin stepped down from executive roles years ago but remain Alphabet’s largest shareholders, with stakes that account for most of their combined [wealth] of $530 billion, according to Forbes.
Multiple reports indicate both men have started shifting more assets to Florida. Google, headquartered in Mountain View for the past 25 years, did not respond to an AP inquiry about their recent moves.
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Liedtke reported from San Ramon, California. Associated Press writer Sophie Austin in Sacramento, California, contributed.