California Billionaires Flee State Ahead of Wealth Tax Cutoff

California voters will soon decide on Proposition 40, a contentious ballot measure that would impose a one-time 5% tax on billionaires residing in the state as of January 1, 2026.

Not everyone is willing to pay up, however. Some high-net-worth individuals have already taken steps to avoid the proposed wealth tax by leaving the state ahead of the cutoff date. Google co-founder Larry Page, worth an estimated $292 billion, has been one such individual.

Page's ties to California have been significant, with a long history dating back decades. However, following the introduction of the wealth tax proposal, he began disentangling himself from the state. His family office, Koop, was converted out of California and incorporated in Delaware in late December.

This move was not an isolated incident, as several other organizations linked to Page also underwent similar relocations. Flu Lab LLC, One Aero, and Oceankind were all incorporated in Delaware during the same period, having previously been based in California.

As tech billionaires continue to flee California's high cost of living and increasing taxes, they're finding a welcoming haven in Miami, Florida.

Amazon founder Jeff Bezos is one such example, having left Seattle for Miami in late 2023, where he later sold his Hunts Point mansion for a record-breaking $63 million. He now resides with his wife Lauren Sánchez Bezos in an impressive Miami compound valued at $237 million.

In Washington state, lawmakers have responded to the exodus by passing a 9.9% tax on household income above $1 million, which will be put to a public vote on November 3rd. This move has likely contributed to the decision of other high-profile individuals to leave California for Florida's more favorable tax climate.

Former Starbucks CEO Howard Schultz is another notable figure who has made the switch from Seattle to Miami, reportedly purchasing a penthouse apartment in the city for $44 million. He cited his desire to be closer to his family and enjoy the sunshine of South Florida as reasons for his move.

Google cofounder Sergey Brin, venture capitalist Peter Thiel, and Miami developer Robert Rivani have also made the transition from California to Florida, with Rivani describing the lack of income taxes in the state as a "huge boon" for him.

The influx of wealthy individuals leaving California has raised concerns about the potential impact on the state's tax revenues. Many of these high-net-worth individuals are relocating to Florida, where they can take advantage of lower or no income taxes.

One reason for their reluctance to leave California is their strong attachment to the state, with many preferring not to relocate despite the financial benefits of doing so. As one Compass agent noted, these individuals have worked hard to accumulate their wealth and prefer to keep it in their pocketbooks rather than surrendering a significant portion of it to taxes.

The departures of prominent figures such as Larry Page and Travis Kalanick are expected to cost California's Prop 40 initiative nearly $29 billion in tax revenue. This is a significant blow, considering the measure was projected to raise around $100 billion for the state.

Despite these challenges, opponents of Prop 40 have been active in their efforts to block it, spending over $187 million to fight the measure, compared to just $32 million from supporters. The outcome of this battle remains uncertain, with even a potential victory for Prop 40 likely to be subject to legal challenges.