Trump knew this was going to happen.
Venture capitalist Chamath Palihapitiya is sounding the alarm over California’s proposed billionaire tax, warning that it is already driving wealthy residents—and their tax dollars—out of the state.
According to Palihapitiya, California has experienced a massive outflow of capital as ultra-high-net-worth individuals prepare for the potential tax increase. He estimates that roughly $1 trillion in billionaire wealth has already left or is in the process of leaving the state.
“Just weeks ago, California had about $2 trillion in billionaire wealth,” Palihapitiya wrote on X. “Now roughly half of that is gone—along with income tax revenue, sales tax revenue, property tax revenue, and the jobs tied to those businesses.”
While the tax proposal has not yet appeared on the ballot, concern is growing across Silicon Valley. Business leaders warn that the policy could accelerate the departure of company founders, investors, and entrepreneurs—many of whom helped build California’s economy over decades.
California has long relied on its high-income earners to support public spending. For years, billionaires paid a disproportionate share of state taxes, helping to fund everything from infrastructure to social programs.
“California’s billionaires were reliable taxpayers,” Palihapitiya wrote. “They were treated as a permanent revenue source. That model is breaking down. If this initiative moves forward, the exodus will continue—and once that revenue disappears, it doesn’t come back.”
He added that as wealthy residents leave, the tax burden does not disappear. Instead, it shifts downward. “When there are no rich people left to tax,” he warned, “the middle class ends up paying more.”
The measure would levy a one time only 5 percent assessment on the global assets of California residents whose net worth exceeds $1 billion.
Supporters argue the measure could help replace potential federal healthcare funding reductions. Critics counter that the tax would discourage investment, reduce job creation, and shrink the state’s long-term tax base.
California Governor Gavin Newsom has publicly opposed the billionaire tax, while also downplaying fears surrounding the proposal.
Speaking at the New York Times DealBook conference in December, Newsom said the debate reflects broader national concerns about wealth inequality, cautioning against extreme policy responses.
For many critics, however, the situation reinforces a long-standing argument from conservatives: aggressive tax policies do not punish the wealthy—they encourage them to leave, often leaving working families to absorb the financial fallout.
